As filed with the Securities and Exchange Commission on August 25, 2011

Registration No. 333-175595

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment
No. 1

to

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

DEMANDWARE,
INC.

(Exact name of registrant as specified in its charter)

Delaware

7372

20-0982939

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification No.)

5 Wall Street

Burlington, Massachusetts 01803

(888) 552-9216

(Address, including zip code, and telephone number, including area code, of registrants principal executive offices)

Thomas D. Ebling

President and Chief Executive Officer

Demandware, Inc.

5 Wall Street

Burlington, Massachusetts 01803

(888) 552-9216

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Mark G. Borden, Esq.

Wilmer Cutler Pickering Hale and Dorr LLP

60 State Street

Boston, Massachusetts 02109

Telephone: (617) 526-6000

Telecopy: (617) 526-5000

William J. Schnoor, Esq.

Christopher J. Austin, Esq.

Goodwin Procter LLP

Exchange Place

53 State Street

Boston, Massachusetts 02109

Telephone: (617) 570-1000

Telecopy: (617) 523-1231

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is
declared effective.

If any of the securities being registered on this form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. ¨

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

þ (Do not check if a smaller reporting company)

Smaller reporting company

¨

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until
the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not
sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any
jurisdiction where the offer or sale is not permitted.

PRELIMINARY
PROSPECTUS

Subject to Completion. Dated August 25, 2011.

SHARES

DEMANDWARE, INC.

Common Stock

This is the initial
public offering of Demandware, Inc. We are offering shares of our common stock. Prior to this offering, there has been no public market for our common stock. We anticipate that
the initial public offering price will be between $ and $ per share.

We intend to apply to have our common stock listed on the New York Stock Exchange under the symbol DWRE.

See Risk Factors beginning on page 9 to read about factors you should consider before buying shares of
our common stock.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

Per Share

Total

Initial Public Offering Price

$

$

Underwriting Discount

$

$

Proceeds, before expenses, to Demandware, Inc.

$

$

To the extent that the underwriters sell more than
shares of common stock, the underwriters have the option to purchase from us up to an additional shares
at the initial public offering price less the underwriting discount.

The underwriters expect
to deliver the shares against payment in New York, New York on or about , 2011.

We have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any
free writing prospectuses we have prepared. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but
only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date regardless of the time of delivery of this prospectus or of any sale of our common stock.

This prospectus contains registered and unregistered trademarks and service marks of us and our subsidiaries, as well as
trademarks and service marks of third parties. All brand names, trademarks and service marks appearing in this prospectus are the property of their respective holders.

For investors outside the United States: we have not and the underwriters have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for
that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of common
stock and the distribution of this prospectus outside the United States.

This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should
consider before investing in our common stock. You should read the following summary together with the more detailed information appearing in this prospectus, especially the Risk Factors section beginning on page 9 and our consolidated
financial statements and related notes, before deciding whether to purchase shares of our common stock.

As used in this
prospectus, unless the context otherwise requires, references to we, us, our and Demandware refer to the consolidated operations of Demandware, Inc. and its consolidated subsidiaries taken as a whole.

Demandware, Inc.

Overview

Demandware is a leading
provider of software-as-a-service e-commerce solutions that enable companies to easily design, implement and manage their own customized e-commerce sites, including websites, mobile applications and other digital storefronts. Our customers use our
highly scalable and integrated Demandware Commerce platform to create a seamless brand experience for consumers across all digital touch points worldwide. By simplifying access to the complex e-commerce functionality required for an effective and
engaging consumer experience, we enable our customers to more easily launch and manage multiple e-commerce sites, initiate marketing campaigns more quickly and improve e-commerce site traffic, all of which can lead to increased revenue.

Through our on-demand software-as-a-service, or SaaS, platform, our customers run the latest version of our software and have access to a steady
stream of new and innovative e-commerce functionality as soon as it becomes available. By using our platform, our customers avoid the need for a large upfront investment in on-premise hardware infrastructure and in customized software that is
difficult and expensive to implement, upgrade and maintain. They also avoid the limitations of generic vendor-created e-commerce solutions that typically do not offer the flexibility and functionality necessary for merchants and retailers to create,
manage and control their own customized online brand presence. Through our network of data centers, we continually monitor the environment in which our customers e-commerce sites operate for performance, availability and accuracy of content
delivery.

From March 31, 2008 to June 30, 2011, the number of customers using our Demandware Commerce platform increased from
16 to 78, a 62.8% compound annual growth rate, or CAGR, and the number of e-commerce sites operating on our platform increased from 39 to 253, an 77.8% CAGR. Our customers include multinational corporations, large retailers and branded consumer
product manufacturers, such as Barneys New York, Burton, Columbia Sportswear, Crocs, House of Fraser, Jewelry Television, Jones Apparel Group, Lifetime Brands, LOreal and neckermann.de. We have structured our customer contracts to align our
interests with those of our customers by participating in a share of our customers gross revenue processed on our platform. We derive our subscription revenue from fees paid to us by our customers for their access to our e-commerce solutions
during the term of our subscription contracts, which is typically three years and ranges from one year to seven years.

We generated
revenue of $7.5 million, $21.4 million and $36.7 million in 2008, 2009 and 2010, respectively. We generated revenue of $24.5 million in the six months ended June 30, 2011, an increase of 60.3% from our revenue of $15.3 million in the six months
ended June 30, 2010. We had net losses of $25.1 million and $10.4 million and net income of $0.3 million in 2008, 2009 and 2010, respectively, and a net loss of $1.9 million for the six months ended June 30, 2011.

We believe our total addressable market is at the center of three large and growing industries: retail, e-commerce and SaaS. According to Euromonitor, the global retail industry in 2010 was $11.6 trillion, of which
only 2.7% was conducted online. The overall global retail industry grew at a 4.8% CAGR from 2005 to 2010, while the global e-commerce market grew at a 17.3% CAGR over the same period to reach $316.5 billion in 2010 and is expected to grow to $653.0
billion in 2015, demonstrating the significant service shift from offline to online retail during this period and the increasing importance of e-commerce within the retail industry. In addition, the adoption of SaaS solutions has grown
significantly, and, according to Gartner, estimated worldwide total software revenue for SaaS delivery within the enterprise applications software markets is expected to grow at a CAGR of 16.3% from $10.0 billion in 2010 to $21.3 billion in 2015.

While the e-commerce market is expanding, it is also becoming more complex, particularly for global multi-channel retailers and brands
trying to reach consumers with consistent storefronts across multiple channels, geographies and digital touchpoints. Several trends are driving this increased complexity:



Need to Maintain Scale and Global Presence. Companies that are unable to maintain the quality and functionality of their e-commerce
sites as they expand and grow risk losing both existing and prospective consumers, domestically and internationally.



Increasing Consumer Demand for Compelling Content and Commerce. As the speed, functionality and sophistication of internet
applications continue to improve, consumers increasingly expect a rich, interactive and personalized e-commerce experience, such as active merchandising, social commerce, dynamic product imaging and ratings and reviews.



Proliferation of Retail Channels. E-commerce is expanding beyond traditional web storefronts viewed on a personal computer due to
the rapid proliferation of internet-enabled devices, including in-store kiosks, smart phones, tablets, and other devices, allowing consumers to access information and shop through an increasing number of digital retail channels.



Integration of Systems and Business Processes. Businesses have dramatically recast their online presence from static e-commerce
sites focused mainly on presentation of basic product information or simple purchasing to dynamic, interactive hubs for consumer marketing, transactions, communications and services. Businesses require robust, scalable and global e-commerce
solutions that can integrate with other enterprise solutions, such as enterprise resource planning, customer relationship management, order management, call centers, supply chain management and business intelligence systems.



Rapid Pace of Innovation. As the switching costs for consumers adopting the newest technologies remain low and new shopping models
evolve, the pressure for companies to keep up with the pace of e-commerce innovation increases.

Traditionally, there
have been two common solutions for the creation and management of an e-commerce business: on-premise enterprise software, which is built, customized and maintained by the merchant itself; and outsourcing, where the entire e-commerce platform for a
retailer or brand is outsourced to a third-party provider. While traditional on-premise enterprise software solutions offer the benefits of in-house control and differentiation through custom development, they typically have relatively high upfront
costs and are difficult to maintain, upgrade and scale. While outsourcing an e-commerce site offers the benefits of minimal required resources for internal infrastructure management and ongoing support, it typically offers limited customization and
flexibility and may not tightly integrate with the customers other business processes.

A SaaS delivery model can combine the lower costs, speed of implementation and other operational
benefits of outsourcing with the functionality, flexibility and customization capabilities of on-premise enterprise software solutions. As a result, the adoption of SaaS solutions across industries has grown significantly. We believe there is a
significant opportunity in the e-commerce market for a company that can offer a comprehensive SaaS solution designed to address the increasingly complex requirements of retailers and brands seeking to attract and satisfy consumers in the digital
world.

Broad Merchandising Functionality. Our platform uses a web-based interface to provide one central location for our customers to
control and manage their e-commerce sitesfrom products to pricing to placement to content.



High Reliability, Safety and Security. We provide high uptime, robust security and built-in disaster recovery through our network
of state-of-the-art data centers. We have provided 99.98% average site availability (excluding planned downtime) since 2005.



Ease of Deployment and Reduced Time To Market. Using our Demandware Commerce platform, customers can easily deploy new e-commerce
sites without the need to install or integrate their own hardware and software infrastructure. Through Demandware LINK, our online community of technology partners, customers can access an extensive library of integrations to third-party
applications to expand the capabilities and functionality of their e-commerce sites. These features enable our existing customers to accelerate their time-to-market for new e-commerce sites and quickly implement new functionality. In addition, we
believe that our typical four to six month platform implementation cycle for new customers is shorter than the period generally required for the development and deployment of comparable on-premise e-commerce software solutions.

Continuous Innovation. Through our SaaS platform, we are able to provide a steady stream of new and innovative e-commerce
functionality through multiple product upgrades each year, which our customers can deploy with minimal or no effort to access the latest technologies on their e-commerce sites.

Our Strategy

Our mission is to
extend our position as a leading provider of SaaS e-commerce solutions and become the global backbone for digital commerce between retailers or branded consumer product manufacturers and their consumers. Key elements of our strategy include:

Retaining and Expanding Business with Existing Customers



Increasing Customers Gross Revenue. We will continue to work with our customers to help grow their online revenue and
optimize the effectiveness, engagement and performance of their e-commerce sites by taking full advantage of the functionality of our Demandware Commerce platform.

Increasing the Number of Customers E-Commerce Sites. We will continue to assist our customers efforts to expand their
e-commerce presence by launching additional distinct revenue-generating e-commerce sites for different geographies, brands and channels.



Extending the Platform Across Channels. We will continue to extend our Demandware Commerce platform to support established and
emerging channels where consumers want to shop, including smart phones, social networks, call centers and in-store kiosks.

Growing Our Customer Base



Investing in Direct Sales. We plan to grow both our enterprise and mid-market direct sales teams to win more customers domestically
and internationally.



Significantly Growing Our European Operations. We intend to continue to grow our European operations by further investing in direct
sales, strategic alliances, services and support in the region.



Expanding and Strengthening Our Strategic Alliances. We intend to continue to grow our distribution channels through key existing
and new alliances.

Targeting New Markets



Small- and Medium-Sized Businesses. We are building a sales team to target small- and medium-sized retailers and emerging brands
that are just starting to implement their e-commerce strategies and want to quickly scale their online business.



Asia Pacific. We expect to build sales and service operations in the Asia Pacific region.

Continuing to Innovate and Add New Functionality to Our Platform



Develop New Features. We plan to use our expertise in e-commerce to develop new applications, features and functionality that will
enhance our platform and expand our addressable market.



Add Functionality Through Acquisitions or Partnerships. We also plan to add incremental functionality to our platform
opportunistically through acquisitions and to invest in our Demandware LINK program by adding new partners and expanding our relationship with current partners so that our customers have access to a growing library of integrations to third-party
applications.

Risks That We Face

Our business is subject to a number of risks that you should consider carefully before deciding whether to invest in our common stock. These risks are described more fully in the Risk Factors
section beginning on page 9 and elsewhere in this prospectus and include the following:



we have had a history of losses, and we may be unable to achieve or sustain profitability;



we depend on a limited number of customers for a substantial portion of our revenue, and the loss of a key customer or the significant reduction of business from
our largest customer could significantly reduce our revenue;



our customers are retailers and branded consumer product manufacturers that typically realize a significant portion of their online sales in the fourth quarter
of each year, specifically during the holiday season. The seasonality of our business could create significant fluctuations in our quarterly revenue;

we recognize revenue from customer subscriptions over the term of the subscription agreement and, therefore, a significant downturn in our business may not be
immediately reflected in our operating results;



our business is substantially dependent upon the continued growth of the market for on-demand software solutions; and



if we fail to manage our SaaS hosting network infrastructure capacity, our existing customers may experience service outages and our new customers may experience
delays in the deployment of our e-commerce solutions.

Ownership of our Capital Stock

After this offering, our directors and executive officers and their affiliates will beneficially own, in the aggregate, approximately
shares of our common stock, or approximately % of our outstanding capital stock, assuming no exercise of
the underwriters option to purchase additional shares of our common stock in this offering.

Our Corporate Information

We were incorporated in Delaware in February 2004 as SSE Holdings, Inc., and changed our name to Demandware, Inc. in August
2004. Our executive offices are located at 5 Wall Street, Burlington, Massachusetts 01803 and our telephone number is (888) 552-9216. Our website address is www.demandware.com. The information on, or that can be accessed through, our
website does not constitute part of this prospectus, and you should not rely on any such information in making the decision whether to purchase our common stock.

The following table presents our consolidated financials and other data for our business for the periods indicated. The summary consolidated
statements of operations data presented below for the years ended December 31, 2008, 2009 and 2010 has been derived from our audited financial statements appearing elsewhere in this prospectus. The consolidated statements of operations data for
the six-month periods ended June 30, 2010 and 2011 and the consolidated balance sheet data at June 30, 2011 have been derived from our unaudited consolidated financial statements for those periods included elsewhere in this prospectus, and except as
described in the notes thereto, have been prepared on a basis consistent with the respective audited consolidated financial statements and, in the opinion of management, include all adjustments, including usual recurring adjustments, necessary for a
fair presentation of that information for such periods. Our historical results are not necessarily indicative of the results to be expected in the future. You should read this summary consolidated financial data in conjunction with
Managements Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and related notes, all included elsewhere in this prospectus.

Year Ended December 31,

Six Months EndedJune 30,

2008

2009

2010

2010

2011

(unaudited)

(in thousands, except per share data)

Consolidated Statements of Operations Data:

Revenue:

Subscription

$

4,688

$

16,085

$

28,714

$

11,654

$

19,682

Services

2,783

5,312

7,976

3,606

4,774

Total revenue

7,471

21,397

36,690

15,260

24,456

Cost of revenue:

Subscription

3,188

3,964

6,222

2,490

4,369

Services

12,435

11,533

8,282

3,556

4,697

Total cost of revenue

15,623

15,497

14,504

6,046

9,066

Gross (loss) profit

(8,152

)

5,900

22,186

9,214

15,390

Operating expenses:

Sales and marketing

8,458

7,304

10,883

4,672

9,303

Research and development

5,173

4,950

6,091

2,722

5,411

General and administrative

3,025

3,729

4,179

1,973

2,972

Total operating expenses

16,656

15,983

21,153

9,367

17,686

(Loss) income from operations

(24,808

)

(10,083

)

1,033

(153

)

(2,296

)

Other (expense) income, net

(223

)

(239

)

(582

)

(705

)

455

(Loss) income before income taxes

(25,031

)

(10,322

)

451

(858

)

(1,841

)

Income tax expense

27

55

142

13

55

Net (loss) income

(25,058

)

(10,377

)

309

(871

)

(1,896

)

Accretion of redeemable preferred stock

(3,233

)

(4,322

)

(5,106

)

(2,556

)

(2,638

)

Net loss attributable to common stockholders

$

(28,291

)

$

(14,699

)

$

(4,797

)

$

(3,427

)

$

(4,534

)

Net loss per share attributable to common stockholders, basic and diluted

$

(5.13

)

$

(2.61

)

$

(0.81

)

$

(0.60

)

$

(0.46

)

Weighted average common shares outstanding, basic and diluted

5,516

5,636

5,901

5,697

9,856

Pro forma net income (loss) per share attributable to common stockholders

The pro forma balance sheet data give effect to the conversion of all outstanding shares of our preferred stock into an aggregate of 54,086,305 shares of common stock upon the
closing of this offering.

(2)

The pro forma as adjusted balance sheet data also give effect to our issuance and sale of shares of common
stock in this offering at an assumed initial public offering price of $ per share, the midpoint of the price range listed on the cover page of this prospectus, after deducting
the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

A $1.00 increase
(decrease) in the assumed initial public offering price of $ per share, which is the midpoint of the range listed on the cover page of this prospectus, would increase (decrease)
the pro forma as adjusted amount of each of cash and cash equivalents, working capital, total assets and total stockholders equity by approximately $ , assuming that
the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below,
together with all of the other information included in this prospectus, including our financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in our common stock. Our business, financial
condition, results of operations and future growth prospects could be materially and adversely affected by any of these risks or uncertainties. In that case, the trading price of our common stock could decline, and you may lose all or part of your
investment.

Risks Related to Our Business and Our Industry

We have had a history of losses, and we may be unable to achieve or sustain profitability.

We have experienced net losses in each year since our inception, except for the year ended December 31, 2010. We experienced a net loss of $10.4 million for the year ended December 31, 2009, net income of
$0.3 million for the year ended December 31, 2010 and a net loss of $1.9 million for the six months ended June 30, 2011. We cannot predict if we will achieve sustained profitability in the near future or at all. We expect to make significant
future expenditures to develop and expand our business. In addition, as a public company we will incur significant legal, accounting and other expenses that we did not incur as a private company. These increased expenditures will make it harder for
us to achieve and maintain future profitability. Our recent growth in revenue and number of customers may not be sustainable, and we may not achieve sufficient revenue to achieve or maintain profitability. We may incur significant losses in the
future for a number of reasons, including the other risks described in this prospectus, and we may encounter unforeseen expenses, difficulties, complications and delays and other unknown events. Accordingly, we may not be able to achieve or maintain
profitability and we may incur significant losses for the foreseeable future.

Our limited operating history makes it difficult to evaluate
our current business and future prospects.

We have been in existence since 2004, and much of our growth has occurred in recent
periods. Our limited operating history may make it difficult for you to evaluate our current business and our future prospects. We have encountered and will continue to encounter risks and difficulties frequently experienced by growing companies in
rapidly changing industries, including increasing and unforeseen expenses as we continue to grow our business. If we do not manage these risks successfully, our business will be harmed.

We depend on a limited number of customers for a substantial portion of our revenue. The loss of a key customer or the significant reduction of business from our largest customer could significantly reduce
our revenue.

We have derived, and we believe that we will continue to derive, a substantial portion of our revenue from a
limited number of customers. For example, for the year ended December 31, 2010, our largest ten customers by revenue accounted for an aggregate of approximately 50% of our revenue, and our largest customer by revenue, neckermann.de, accounted
for 20.6% of our revenue. While the percentage of our revenue from neckermann.de is trending down, if we were to lose neckermann.de or one or more of our other key customers, there is no assurance that we would be able to replace such customers with
new customers that generate comparable revenue, which would adversely affect our financial condition and results of operations. Our operating results for the foreseeable future will continue to depend on our ability to sell our e-commerce solutions
to a small number of customers. Any revenue growth will depend on our success in growing our customers online revenue processed on our platform and expanding our customer base to include additional customers.

The seasonality of our business creates significant variance in our quarterly revenue.

Our customers are retailers and branded consumer product manufacturers that typically realize a significant portion of their online sales in the
fourth quarter of each year, specifically during the holiday season. As a result of this seasonal variation, our subscription revenue fluctuates, with additional fees in excess of committed annual levels, called overage fees, being higher in the
fourth quarter than in other quarters and with revenue generally declining in the first quarter sequentially from the fourth quarter.

We
recognize revenue from customer subscriptions over the term of the subscription agreement and, therefore, a significant downturn in our business may not be immediately reflected in our operating results.

We recognize revenue from subscription agreements monthly over the terms of these agreements, which is typically three years. As a result, a
significant portion of the revenue we report in each quarter is generated from customer agreements entered into during previous periods. Consequently, a decline in new or renewed subscriptions in any one quarter may not impact our financial
performance in that quarter, but might negatively affect our revenue in future quarters. If a number of contracts expire and are not renewed in the same quarter, our revenue may decline significantly in that quarter and subsequent quarters. In
addition, we may be unable to adjust our fixed costs in response to reduced revenue. Accordingly, the effect of significant declines in sales and market acceptance of our solutions may not be reflected in our short-term results of operations.

Our business is substantially dependent upon the continued growth of the market for on-demand software solutions.

We derive, and expect to continue to derive, substantially all of our revenue from the sale of our on-demand e-commerce solutions. As a result,
widespread acceptance and use of the on-demand business model is critical to our future growth and success. Under the perpetual or periodic license model for software procurement, users of the software would typically run the applications on their
hardware. Because many companies are generally predisposed to maintaining control of their information technology, or IT, systems and infrastructure, there may be resistance to the concept of accessing software functionality as a service provided by
a third party. In addition, the market for on-demand software solutions is still evolving, and competitive dynamics may cause pricing levels to change, as the market matures and as existing and new market participants introduce new types of
solutions and different approaches to enable organizations to address their e-commerce needs. As a result, we may be forced to reduce the prices we charge for our solutions and may be unable to renew existing customer agreements or enter into new
customer agreements at the same prices and upon the same terms that we have historically. If the market for on-demand software solutions fails to grow, grows more slowly than we currently anticipate or evolves and forces us to reduce the prices we
charge for our solutions, demand for our solutions and our revenue, gross margin and other operating results could be materially adversely affected.

We rely on a variable pricing model and any change in that model could adversely affect our financial results.

We have adopted a variable pricing model whereby we participate in a share of our customers gross revenue processed on our platform. This
pricing model aligns our interests with those of our customers and reflects the need for us to expand our own processing and support infrastructure as activity on our customers e-commerce sites increases. All of our customer contracts are
based on a variable pricing model. If customers were to demand a fixed pricing model that did not provide for variability based on their level of usage of our platform, our financial results could be adversely affected.

Our sales cycle can vary substantially from customer to customer, but typically requires
six to nine months depending on the size and complexity of the opportunity. From the time a new contract is signed, four to six months are typically required to implement and launch an e-commerce site for a new customer. A number of factors
influence the length and variability of our sales and implementation cycles, including, for example:



the need to educate potential customers about the uses and benefits of our solutions;



the relatively long duration of the commitment customers make in their agreements with us;



the discretionary nature of potential customers purchasing and budget cycles and decisions;



the competitive nature of potential customers evaluation and purchasing processes;

announcements or planned introductions of new products by us or our competitors; and



lengthy purchasing approval processes of potential customers.

Lengthy sales and implementation cycles make it difficult to predict the quarter in which revenue from a new customer may first be recognized. We may incur significant sales and marketing expenses in anticipation
of selling our products, and if we do not achieve the level of revenue we expected, our operating results will suffer and our stock price may decline. Further, our potential customers frequently need to obtain approvals from multiple decision makers
before making purchase decisions. Delays in our sales or implementation cycles could cause significant variability in our revenue and operating results for any particular period.

If we are unable to retain our existing customers, our revenue and results of operations would be adversely affected.

We sell our solutions pursuant to agreements that are generally three years in duration. Our customers have no obligation to renew their subscriptions after their subscription period expires, and these
subscriptions may not be renewed on the same or on more profitable terms. As a result, our ability to grow depends in part on subscription renewals. We may not be able to accurately predict future trends in customer renewals, and our customers
renewal rates may decline or fluctuate because of several factors, including their satisfaction or dissatisfaction with our services, the cost of our services and the cost of services offered by our competitors or reductions in our customers
spending levels. If our customers do not renew their subscriptions for our services, renew on less favorable terms or do not purchase additional functionality or subscriptions, our revenue may grow more slowly than expected or decline, and our
profitability and gross margins may be harmed.

Security and privacy breaches may hurt our business.

Any security breaches, unauthorized access, unauthorized usage, virus or similar breach or disruption could result in loss of confidential
information, damage to our reputation, early termination of our contracts, litigation, regulatory investigations or other liabilities. If our, our customers or our partners security measures are breached as a result of third-party
action, employee error, malfeasance or otherwise and, as a result, someone obtains unauthorized access to customer data, our reputation will be damaged, our business may suffer and we could incur significant liability.

Techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a
target. As a result, we may be unable to anticipate these techniques or to implement adequate preventative measures. If an actual or perceived

security breach occurs, the market perception of our security measures could be harmed and we could lose sales and customers. Any significant violations of data privacy could result in the loss
of business, litigation and regulatory investigations and penalties that could damage our reputation and adversely impact our results of operations and financial condition. Moreover, if a high profile security breach occurs with respect to another
software-as-a-service, or SaaS, provider, our customers and potential customers may lose trust in the security of the SaaS business model generally, which could adversely impact our ability to retain existing customers or attract new ones.

Our business and operations have experienced rapid growth and organizational change in recent periods, which has placed, and may continue to
place, significant demands on our management and infrastructure. If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service or address competitive challenges adequately.

We increased our number of full-time employees from 104 as of December 31, 2009, to 150 as of December 31, 2010
and to 187 as of June 30, 2011, and our revenue grew from $21.4 million in 2009 to $36.7 million in 2010 and to $24.5 million through the six months ended June 30, 2011. Our growth has placed, and may continue to place, a significant strain on our
managerial, administrative, operational, financial and other resources. We intend to further expand our overall business, customer base, headcount and operations both domestically and internationally, with no assurance that our business or revenue
will continue to grow. Creating a global organization and managing a geographically dispersed workforce will require substantial management effort, the allocation of valuable management resources and significant additional investment in our
infrastructure. We will be required to continue to improve our operational, financial and management controls and our reporting procedures and we may not be able to do so effectively. As such, we may be unable to manage our expenses effectively in
the future, which may negatively impact our gross margins or operating expenses in any particular quarter. If we fail to manage our anticipated growth and change in a manner that preserves the key aspects of our corporate culture, the quality of our
solutions may suffer, which could negatively affect our brand and reputation and harm our ability to retain and attract customers.

We will need to continue to expand our sales and marketing infrastructure in order to grow our customer base and our business. Identifying, recruiting and training these sales and marketing personnel will require
significant time, expense and attention. Our business will be seriously harmed and our financial resources will be wasted if our efforts to expand our direct and indirect sales channels do not generate a corresponding increase in revenue. In
particular, if we are unable to hire, develop and retain talented sales personnel or if our new direct sales personnel are unable to achieve expected productivity levels in a reasonable period of time, we may not be able to significantly increase
our revenue and grow our business.

The global recession and related credit crisis may continue to adversely affect our business and results of
operations.

The U.S. and other global economies have experienced a recession that has affected all sectors of the economy,
resulting in declines in economic growth and consumer confidence, increases in unemployment rates and uncertainty about economic stability. Global credit and financial markets have also experienced extreme disruptions, including diminished liquidity
and credit availability and rapid fluctuations in market valuations. Our business has been affected by these conditions, and there is no certainty that economic conditions will not deteriorate further. These uncertainties may affect our business in
a number of ways, making it difficult to accurately forecast and plan our future business

activities. Weak economic conditions may lead consumers and retailers to postpone spending, which may cause our customers to decrease or delay their purchases of our solutions. In addition, the
inability of consumers to obtain credit could negatively affect our revenue. Financial difficulties experienced by third parties with whom we have entered relationships and upon whom we depend in order to grow our business could detract from the
quality or timeliness of the products or professional services they provide to us, which could adversely affect our reputation and relationships with our customers.

If the current uncertain economic conditions continue or further deteriorate, we could be required to record charges relating to restructuring costs or the impairment of assets, and our business and results of
operations could be materially adversely affected.

We are dependent upon consumers willingness to use the internet for commerce.

Our success depends upon the general publics continued willingness to use the internet as a means to purchase goods,
communicate, and conduct and research commercial transactions. If consumers became unwilling or less willing to use the internet for commerce for any reason, including lack of access to high-speed communications equipment, congestion of traffic on
the internet, internet outages or delays, disruptions or other damage to users computers, increases in the cost of accessing the internet and security and privacy risks or the perception of such risks, our business could be materially
adversely affected.

Even if demand for e-commerce products and services increases generally, there is no guarantee that demand for SaaS solutions
like ours will increase to a corresponding degree.

For our customers and potential customers to be willing to invest in our
e-commerce solutions, the internet must continue to be accepted and widely used for commerce and communication. If e-commerce does not grow or grows more slowly than expected, then our future revenue and profits may not meet our expectations or
those of analysts. The widespread adoption of our solutions depends not only on strong demand for e-commerce products and services generally, but also for products and services delivered via a SaaS business model in particular. Many companies
continue to rely primarily or exclusively on traditional means of commerce that are not internet-based and may be reluctant to change their patterns of commerce. Even if such companies do adopt e-commerce solutions, it is unclear whether they will
desire e-commerce solutions like ours. As a result, we cannot assure you that our SaaS e-commerce solutions will achieve and sustain the high level of market acceptance that is critical for the future success of our business.

If we fail to manage our SaaS hosting network infrastructure capacity, our existing customers may experience service outages and our new customers may
experience delays in the deployment of our e-commerce solutions.

We have experienced significant growth in the number of users,
transactions and data that our hosting infrastructure supports. We seek to maintain sufficient excess capacity in our SaaS hosting network infrastructure to meet the needs of all of our customers. We also seek to maintain excess capacity to
facilitate the rapid provision of new customer deployments and the expansion of existing customer deployments. However, the provision of new hosting infrastructure requires significant lead time. If we do not accurately predict our infrastructure
capacity requirements, particularly in the fourth quarter when we might experience significant increases in traffic on our customers e-commerce sites, our customers could experience service outages that may subject us to financial penalties
and financial liabilities and result in customer losses. If our hosting infrastructure capacity fails to keep pace with increased sales, customers may experience delays as we seek to obtain additional capacity, which could harm our reputation and
adversely affect our revenue growth.

If we fail to develop our brand cost-effectively, our business may suffer.

We believe that developing and maintaining awareness of our brand in a cost-effective manner is critical to achieving widespread acceptance of our
existing and future solutions and is an important element in attracting new customers. Furthermore, we believe that the importance of brand recognition will increase as competition in our market increases. Successful promotion of our brand will
depend largely on the effectiveness of our marketing efforts and on our ability to provide reliable and useful services at competitive prices. In the past, our efforts to build our brand have involved significant expenses. Brand promotion activities
may not yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incurred in building our brand. If we fail to successfully promote and maintain our brand, or incur substantial expenses in an unsuccessful
attempt to promote and maintain our brand, we may fail to attract enough new customers or retain our existing customers to the extent necessary to realize a sufficient return on our brand-building efforts, and our business could suffer.

We may not be able to compete successfully against current and future competitors.

We face intense competition in the market for e-commerce applications and services, and we expect competition to intensify in the future. We have
competitors with longer operating histories, larger customer bases and greater financial, technical, marketing and other resources than we do. Increased competition may result in reduced pricing for our solutions, longer sales cycles or a decrease
of our market share, any of which could negatively affect our revenue and future operating results and our ability to grow our business.

A number of competitive factors could cause us to lose potential sales or to sell our solutions at lower prices or at reduced margins, including,
among others:

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Potential customers may choose to develop e-commerce applications in-house, rather than paying for our solutions;

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Some of our current and potential competitors have greater financial, marketing and technical resources than we do, allowing them to leverage a larger installed
customer base and distribution network, adopt more aggressive pricing policies and offer more attractive sales terms, adapt more quickly to new technologies and changes in customer requirements, and devote greater resources to the promotion and sale
of their products and services than we can;

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Current and potential competitors have established or may establish cooperative relationships among themselves or with third parties to enhance their products
and expand their markets, and consolidation in our industry is likely to intensify. Accordingly, new competitors or alliances among competitors may emerge and rapidly acquire significant market share;

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Current and potential competitors may offer software that addresses one, or a limited number, of e-commerce functions at a lower price point or with greater
depth than our solutions; and

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Software vendors could bundle e-commerce solutions or offer such products at a lower price as part of a larger product sale.

We cannot assure you that we will be able to compete successfully against current and future competitors. In addition, competition may intensify as
our competitors enter into business combinations or alliances or raise additional capital and established companies in other market segments or geographic markets expand into our market segments or geographic markets. If we cannot compete
successfully against our competitors, our business, results of operations and financial condition could be negatively impacted.

Mergers of or other strategic transactions by our competitors or our customers could weaken our competitive
position or reduce our revenue.

If one or more of our competitors were to merge or partner with another of our competitors, the
change in the competitive landscape could adversely affect our ability to compete effectively. Our competitors may also establish or strengthen cooperative relationships with our current or future strategic distributors, systems integrators,
third-party consulting firms or other parties with whom we have relationships, thereby limiting our ability to promote our solutions and limiting the number of consultants available to implement our solutions. In addition, we may lose customers that
merge with or are acquired by companies using a competitors or an internally developed solution. Disruptions in our business caused by these events could reduce our revenue.

Our growth depends in part on the success of our strategic relationships with third parties.

We anticipate that we will continue to depend on various third-party relationships in order to grow our business. In addition to growing our indirect sales channels, we intend to pursue additional relationships
with other third parties, such as technology and content providers and implementation consultants. Identifying, negotiating and documenting relationships with third parties require significant time and resources as does integrating third-party
content and technology. Some of the third parties that sell our solutions have the direct contractual relationships with our ultimate end-user customers, and therefore we risk the loss of such customers if the third parties fail to perform their
obligations. Our agreements with distributors and providers of technology, content and consulting services are typically non-exclusive, do not prohibit them from working with our competitors or from offering competing services and may not have
minimum purchase commitments. Our competitors may be effective in providing incentives to third parties to favor their products or services or to prevent or reduce subscriptions to our solutions. In addition, these distributors and providers may not
perform as expected under our agreements, and we have had, and may in the future have, disagreements or disputes with such distributors and providers, which could negatively affect our brand and reputation. A global economic slowdown could also
adversely affect the businesses of our distributors, and it is possible that they may not be able to devote the resources we expect to the relationship.

If we are unsuccessful in establishing or maintaining our relationships with these third parties, specifically with eCommera, NETRADA and PFSweb, our ability to compete in the marketplace or to grow our revenue
could be impaired and our operating results would suffer. Even if we are successful, we cannot assure you that these relationships will result in improved operating results.

We could incur substantial costs as a result of any claim of infringement of another partys intellectual property rights.

In recent years, there has been significant litigation in the United States involving patents and other intellectual property rights. Companies
providing internet-related products and services are increasingly bringing and becoming subject to suits alleging infringement of proprietary rights, particularly patent rights. These risks have been amplified by the increase in third parties, which
we refer to as non-practicing entities, whose sole primary business is to assert such claims. We could incur substantial costs in prosecuting or defending any intellectual property litigation. If we sue to enforce our rights or are sued by a third
party that claims that our technology infringes its rights, the litigation could be expensive and could divert our management resources.

In addition, in most instances, we have agreed to indemnify customers against certain claims that our products infringe the intellectual property
rights of third parties. We have received indemnification requests from a number of our customers that have received letters from, or been sued by, non-practicing entities claiming infringement of patents owned by them. Many of those underlying
claims, and the extent, if any, of our indemnification obligations, have not yet been resolved. The results of any

intellectual property litigation to which we might become a party, or for which we are required to provide indemnification, may require us to do one or more of the following:

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cease selling or using products or services that incorporate the challenged intellectual property;

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make substantial payments for legal fees, settlement payments or other costs or damages;

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obtain a license, which may not be available on reasonable terms, to sell or use the relevant technology; or

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redesign those products or services to avoid infringement.

If we are required to make substantial payments or undertake any of the other actions noted above as a result of any intellectual property infringement claims against us or any obligation to indemnify our customers
for such claims, such payments or costs could have a material adverse effect upon our business and financial results.

We could incur substantial
costs in protecting our intellectual property from infringement, and any failure to protect our intellectual property could impair our business.

We seek to protect the source code for our proprietary software under a combination of patent, copyright and trade secrets law. However, because we make some of the source code available to some customers, third
parties may be more likely to misappropriate it. Our policy is to enter into confidentiality agreements with our employees, consultants, vendors and customers and to control access to our software, documentation and other proprietary information.
Despite these precautions, it may be possible for someone to copy our software or other proprietary information without authorization or to develop similar software independently.

Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or to obtain and use
information that we regard as proprietary. Policing unauthorized use of our products is difficult, and while we are unable to determine the extent to which piracy of our software exists, we expect software piracy to be a persistent problem.
Litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity.
Such litigation could be costly, time consuming and distracting to management, result in a diversion of resources, the impairment or loss of portions of our intellectual property and have a material adverse effect on our business, operating results
and financial condition. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. These steps may be
inadequate to protect our intellectual property. We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property. Despite our precautions, it may be
possible for unauthorized third parties to copy our products and use information that we regard as proprietary to create products and services that compete with ours. Some license provisions protecting against unauthorized use, copying, transfer and
disclosure of our licensed products may be unenforceable under the laws of certain jurisdictions and foreign countries. Further, the laws of some countries do not protect proprietary rights to the same extent as the laws of the United States. To the
extent we expand our international activities, our exposure to unauthorized copying and use of our products and proprietary information may increase.

There can be no assurance that our means of protecting our proprietary rights will be adequate or that our competitors will not independently develop similar technology. If we fail to meaningfully protect our
intellectual property, then our business, brand, operating results and financial condition could be materially harmed.

If our software products contain serious errors or defects, then we may lose revenue and market acceptance and
may incur costs to defend or settle product liability claims.

Complex software applications such as ours often contain errors or
defects, particularly when first introduced or when new versions or enhancements are released. Despite internal testing and testing by our customers, our current and future products may contain serious defects, which could result in lost revenue or
a delay in market acceptance.

Since our customers use our products for critical business applications, such as e-commerce, errors,
defects or other performance problems could result in damage to our customers. They could seek significant compensation from us for the losses they suffer. Although our customer agreements typically contain provisions designed to limit our exposure
to product liability claims, existing or future laws or unfavorable judicial decisions could negate these limitations. Even if not successful, a product liability claim brought against us would likely be time consuming and costly and could seriously
damage our reputation in the marketplace, making it harder for us to sell our products.

Government and industry regulation of the internet is
evolving and could directly restrict our business or indirectly affect our business by limiting the growth of e-commerce. Unfavorable changes in government regulation or our failure to comply with regulations could harm our business and operating
results.

As e-commerce evolves, federal, state and foreign agencies have adopted and could in the future adopt regulations
covering issues such as user privacy, content, and taxation of products and services. Government regulations could limit the market for our products and services or impose burdensome requirements that render our business unprofitable. Our e-commerce
solutions enable our customers to collect, manage and store a wide range of consumer data. The United States and various state governments have adopted or proposed limitations on the collection, distribution and use of personal information. Several
foreign jurisdictions, including the European Union and the United Kingdom, have adopted legislation (including directives or regulations) that increase or change the requirements governing data collection and storage in these jurisdictions. If our
privacy or data security measures fail to comply with current or future laws and regulations, we may be subject to litigation, regulatory investigations or other liabilities, or our customers may terminate their relationships with us.

In addition, although many regulations might not apply to our business directly, we expect that laws regulating the solicitation, collection or
processing of personal and consumer information could affect our customers ability to use and share data, potentially reducing demand for our services. The Telecommunications Act of 1996 prohibits certain types of information and content from
being transmitted over the internet. The prohibitions scope and the liability associated with a violation are currently unsettled. In addition, although substantial portions of the Communications Decency Act were held to be unconstitutional,
we cannot be certain that similar legislation will not be enacted and upheld in the future. It is possible that legislation could expose companies involved in e-commerce to liability, which could limit the growth of e-commerce generally. Legislation
like the Telecommunications Act and the Communications Decency Act could dampen the growth in web usage and decrease its acceptance as a medium of communications and commerce. Moreover, if future laws and regulations limit our customers
ability to use and share consumer data or our ability to store, process and share data with our customers over the internet, demand for our solutions could decrease, our costs could increase, and our results of operations and financial condition
could be harmed.

In addition, taxation of services provided over the internet or other charges imposed by government agencies or by
private organizations for accessing the internet may also be imposed. Any regulation imposing greater fees for internet use or restricting information exchange over the internet could result in a decline in the use of the internet and the viability
of internet-based services, which could harm our business and operating results.

We use a limited number of data centers to deliver our services. Any disruption of service at these facilities
could harm our business.

We manage our services and serve all of our customers from a limited number of third-party data center
facilities. While we engineer and architect the actual computer and storage systems upon which our platform runs, which we call our grid computing points of delivery, or PODs, and deploy them to the data center facilities, we do not control the
operation of these facilities.

The owners of our data facilities have no obligation to renew their agreements with us on commercially
reasonable terms, or at all. If we are unable to renew these agreements on commercially reasonable terms, we may be required to transfer to new data center facilities, and we may incur significant costs and possible service interruption in
connection with doing so.

Any changes in third-party service levels at our data centers or any errors, defects, disruptions or other
performance problems with our services could harm our reputation and may damage our customers businesses. Interruptions in our services might reduce our revenue, cause us to issue credits to customers, subject us to potential liability, and
cause customers to terminate their subscriptions or harm our renewal rates.

Our data centers are vulnerable to damage or interruption
from human error, intentional bad acts, earthquakes, hurricanes, floods, fires, war, terrorist attacks, power losses, hardware failures, systems failures, telecommunications failures and similar events. At least one of our data facilities is located
in an area known for seismic activity, increasing our susceptibility to the risk that an earthquake could significantly harm the operations of these facilities. The occurrence of a natural disaster or an act of terrorism, or vandalism or other
misconduct, a decision to close the facilities without adequate notice or other unanticipated problems could result in lengthy interruptions in our services.

We may not be able to respond to rapid technological changes with new solutions, which could have a material adverse effect on our sales and profitability.

The on-demand e-commerce market is characterized by rapid technological change, frequent new product and service introductions and evolving industry
standards. Our ability to attract new customers and increase revenue from existing customers will depend in large part on our ability to enhance and improve our existing solutions, introduce new solutions and sell into new industry markets. To
achieve market acceptance for our solutions, we must effectively anticipate and offer solutions that meet changing customer demands in a timely manner. Customers may require features and capabilities that our current solutions do not have. If we
fail to develop solutions that satisfy customer preferences in a timely and cost-effective manner, our ability to renew our contracts with existing customers and our ability to create or increase demand for our solutions will be harmed.

We may experience difficulties with software development, industry standards, design, manufacturing or marketing that could delay or prevent our
development, introduction or implementation of new solutions and enhancements. The introduction of new solutions by competitors, the emergence of new industry standards or the development of entirely new technologies to replace existing offerings
could render our existing or future solutions obsolete.

If we are unable to successfully develop or acquire new e-commerce capabilities
and functionality, enhance our existing solutions to anticipate and meet customer preferences or sell our solutions into new markets, our revenue and results of operations would be adversely affected.

Our quarterly operating results may fluctuate in the future. As a result, we may fail to meet or exceed the
expectations of research analysts or investors, which could cause our stock price to decline.

Our quarterly operating results
may fluctuate as a result of a variety of factors, many of which are outside of our control. If our quarterly operating results or guidance fall below the expectations of research analysts or investors, the price of our common stock could decline
substantially. Fluctuations in our quarterly operating results or guidance may be due to a number of factors, including, but not limited to, those listed below:

the extent to which our existing customers renew their subscriptions for our solutions and the timing and terms of those renewals;

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the extent to which existing customers deploy or discontinue use of additional e-commerce sites on our platform;

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the extent to which new customers are attracted to our solutions to satisfy their e-commerce needs;

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the timing, committed subscription levels and revenue share rates at which we enter into agreements for our solutions with new customers;

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the addition or loss of large customers, including through acquisitions or consolidations;

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the number and size of new customers and the number and size of renewal customers in a particular period;

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the mix of customers across small, mid-sized and large organizations;

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changes in our pricing policies or those of our competitors;

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the financial condition and creditworthiness of our customers;

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the amount and timing of operating expenses, including those related to the maintenance and expansion of our business, operations and infrastructure;

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the timing and success of new solutions introduced by us;

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the timing and success of current and new products and services introduced by our competitors;

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other changes in the competitive dynamics of our industry, including consolidation among competitors, customers or strategic partners;

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the timing of expenses related to the development of new products and technologies, including enhancements to our solutions;

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our ability to manage our existing business and future growth, including increases in the number of customers on our platform, additional customer e-commerce
sites and new geographic regions;

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expenses related to our data centers and the expansion of such data centers;

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various factors related to disruptions in our SaaS hosting network infrastructure, defects in our solutions, privacy and data security, and exchange rate
fluctuations, each of which is described elsewhere in these risk factors;

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our ability to efficiently and cost effectively deploy new customer e-commerce sites on our platform; and

We believe that our quarterly revenue and operating results may vary significantly in the future and
that period-to-period comparisons of our operating results may not be meaningful. You should not rely on the results of one quarter as an indication of future performance.

Our long-term success depends, in part, on our ability to expand the sales of our e-commerce solutions to customers located outside of the United States, and thus our business is susceptible to risks
associated with international sales and operations.

We currently maintain offices and have sales personnel in Germany, France,
the Netherlands and the United Kingdom, and we intend to build out our international operations. Any international expansion efforts that we may undertake may not be successful. In addition, conducting international operations in new markets
subjects us to new risks that we have not generally faced in the United States. These risks include:

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localization of our solutions, including translation into foreign languages and adaptation for local practices and regulatory requirements;

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lack of familiarity and burdens of complying with foreign laws, legal standards, regulatory requirements, tariffs, and other barriers;

difficulties in managing and staffing international operations and differing employer/employee relationships;

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fluctuations in exchange rates that may increase the volatility of our foreign based revenue;

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potentially adverse tax consequences, including the complexities of foreign value added tax (or other tax) systems and restrictions on the repatriation of
earnings;

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uncertain political and economic climates; and

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reduced or varied protection for intellectual property rights in some countries.

These factors may cause our international costs of doing business to exceed our comparable domestic costs. Operating in international markets also
requires significant management attention and financial resources. Any negative impact from our international business efforts could negatively impact our business, results of operations and financial condition as a whole.

Fluctuations in the exchange rate of foreign currencies could result in currency transactions losses.

We currently have foreign sales denominated in Euros and British pound sterling and, may in the future, have sales denominated in the currencies of
additional countries in which we establish or have established sales offices. In addition, we incur a portion of our operating expenses in Euros and, to a lesser extent, other foreign currencies. Any fluctuation in the exchange rate of these foreign
currencies may negatively impact our business, financial condition and operating results. We have not previously engaged in foreign currency hedging. If we decide to hedge our foreign currency exposure, we may not be able to hedge effectively due to
lack of experience, unreasonable costs or illiquid markets.

We are subject to governmental export and import controls that could impair our ability to compete in
international markets due to licensing requirements and subject us to liability if we are not in full compliance with applicable laws.

Our solutions are subject to export controls, including the Commerce Departments Export Administration Regulations and various economic and trade sanctions regulations established by the Treasury
Departments Office of Foreign Assets Controls, and exports of our solutions must be made in compliance with these laws. If we fail to comply with these U.S. export control laws and import laws, including U.S. Customs regulations, we and
certain of our employees could be subject to substantial civil or criminal penalties, including the possible loss of export or import privileges; fines, which may be imposed on us and responsible employees or managers; and, in extreme cases, the
incarceration of responsible employees or managers. In addition, if our distributors fail to obtain appropriate import, export or re-export licenses or authorizations, we may also be adversely affected through reputational harm and penalties.
Obtaining the necessary authorizations, including any required license, for a particular sale may be time-consuming and is not guaranteed, and may result in the delay or loss of sales opportunities. Furthermore, the U.S. export control laws and
economic sanctions laws prohibit the shipment of certain products and services to U.S. embargoed or sanctioned countries, governments and persons. Even though we take precautions to prevent our solutions from being shipped or provided to U.S.
sanctions targets, our solutions and services could be shipped to those targets or provided by our distributors despite such precautions. Any such shipment could have negative consequences, including government investigations, penalties and
reputational harm. In addition, various countries regulate the import of certain encryption technology, including through import permitting/licensing requirements, and have enacted laws that could limit our ability to distribute our solutions or
could limit our customers ability to implement our solutions in those countries. Changes in our solutions or changes in export and import regulations may create delays in the introduction and sale of our solutions in international markets,
prevent our customers with international operations from deploying our solutions or, in some cases, prevent the export or import of our solutions to certain countries, governments or persons altogether. Any change in export or import regulations,
economic sanctions or related laws, shift in the enforcement or scope of existing regulations, or change in the countries, governments, persons or technologies targeted by such regulations, could result in decreased use of our solutions, or in our
decreased ability to export or sell our solutions to existing or potential customers with international operations. Any decreased use of our solutions or limitation on our ability to export or sell our solutions would likely adversely affect our
business, financial condition and results of operations.

Our use of open source software could negatively affect our ability to sell
our services and subject us to possible litigation.

A portion of the technologies licensed by us incorporate so-called
open source software, and we may incorporate open source software in the future. Such open source software is generally licensed by its authors or other third parties under open source licenses. If we fail to comply with these licenses,
we may be subject to certain conditions, including requirements that we offer our solutions that incorporate the open source software for no cost, that we make available source code for modifications or derivative works we create based upon,
incorporating or using the open source software and/or that we license such modifications or derivative works under the terms of the particular open source license. If an author or other third party that distributes such open source software were to
allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined from the sale of
our solutions that contained the open source software and required to comply with the foregoing conditions, which could disrupt the distribution and sale of some of our solutions. In addition, there have been claims challenging the ownership of open
source software against companies that incorporate open source software into their products. As a result, we could be

subject to suits by parties claiming ownership of what we believe to be open source software. Litigation could be costly for us to defend, have a negative effect on our operating results and
financial condition or require us to devote additional research and development resources to change our products.

We rely on third-party
software, including server software and licenses from third parties to use patented intellectual property that is required for the development of our solutions, which may be difficult to obtain or which could cause errors or failures of our
solutions.

We rely on software licensed from or hosted by third parties to offer our solutions. In addition, we may need to
obtain future licenses from third parties to use intellectual property associated with the development of our solutions, which might not be available to us on acceptable terms, or at all. Any loss of the right to use any software required for the
development and maintenance of our solutions could result in delays in the provision of our solutions until equivalent technology is either developed by us, or, if available, is identified, obtained and integrated, which could harm our business. Any
errors or defects in third-party software could result in errors or a failure of our solutions which could harm our business.

If we fail to
maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired, which could harm our operating results, our ability to operate our business and investors views of us.

Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce
accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. In connection with this offering, we intend to begin the process of documenting, reviewing and improving our
internal controls and procedures for compliance with Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, which will require annual management assessment of the effectiveness of our internal control over financial
reporting. We will be testing our internal controls in connection with managements certification related to internal controls for the year ending December 31, 2012 and, as part of that documentation and testing, identifying areas for
further attention and improvement. We have begun recruiting additional finance and accounting personnel with certain skill sets that we will need as a public company.

Implementing any appropriate changes to our internal controls may distract our officers and employees, entail substantial costs to modify our existing processes and take significant time to complete. These changes
may not, however, be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs
and harm our business. In addition, investors perceptions that our internal controls are inadequate or that we are unable to produce accurate financial statements on a timely basis may harm our stock price and make it more difficult for us to
effectively market and sell our service to new and existing customers.

We may expand by acquiring or investing in other companies, which may
divert our managements attention, result in additional dilution to our stockholders and consume resources that are necessary to sustain our business.

Although we have no ongoing negotiations or current agreements or commitments for any acquisitions, our business strategy may include acquiring complementary services, technologies or businesses. We also may enter
into relationships with other businesses to expand our service offerings

or our ability to provide service in foreign jurisdictions, which could involve preferred or exclusive licenses, additional channels of distribution, discount pricing or investments in other
companies. Negotiating these transactions can be time-consuming, difficult and expensive, and our ability to close these transactions may often be subject to conditions or approvals that are beyond our control. Consequently, these transactions, even
if undertaken and announced, may not close.

An acquisition, investment or new business relationship may result in unforeseen operating
difficulties and expenditures. In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products, personnel or operations of the acquired companies, particularly if the key personnel of the acquired
company choose not to work for us, the companys software is not easily adapted to work with ours or we have difficulty retaining the customers of any acquired business due to changes in management or otherwise. Acquisitions may also disrupt
our business, divert our resources and require significant management attention that would otherwise be available for development of our business. Moreover, the anticipated benefits of any acquisition, investment or business relationship may not be
realized or we may be exposed to unknown liabilities. For one or more of those transactions, we may:

The loss of key personnel or an inability to attract and retain highly skilled personnel may impair our ability to grow our business.

We are highly dependent upon the continued service and performance of our senior management team and key technical and sales personnel, such as our
president and chief executive officer, our executive vice president, field operations and our chief technology officer. These key employees may terminate employment with us at any time with no advance notice. The replacement of these officers likely
would involve significant time and costs, and the loss of these officers may significantly delay or prevent the achievement of our business objectives.

We face intense competition for qualified individuals from numerous technology, software and manufacturing companies. For example, our competitors may be able to attract and retain a more qualified engineering team
by offering more competitive compensation packages. If we are unable to attract new engineers and retain our current engineers, we may not be able to develop and maintain our services at the same levels as our competitors and we may, therefore, lose
potential customers and sales penetration in certain markets. Our failure to attract and retain suitably qualified individuals could have an adverse effect on our ability to implement our business plan and, as a result, our ability to compete would
decrease, our operating results would suffer and our revenue would decrease. In addition, if any of our key employees joins a competitor or decides to otherwise compete with us, we may experience a material disruption of our operations and
development plans, which may cause us to lose customers or increase operating expenses as the attention of our remaining senior managers is diverted to recruit replacements for the departed key employees.

Because we recognize costs of services as they are incurred and we recognize related services revenue for
subscriptions and services sold in a single arrangement ratably, our gross margins may not be indicative of trends in our services business, which increases the difficulty of evaluating our future financial results.

When we sell subscriptions and services in a single arrangement, which is sometimes referred to as a multiple-element arrangement, we recognize the
services revenue ratably over the longer of the related subscription term or the estimated expected life of the customer relationship. The current estimated expected life of our customer relationships ranges from three to six years. We continue to
evaluate the length of the estimated expected life of our customer relationships as we gain more experience with customer renewals. A change in the estimated expected life of our customer relationship periods could result in the recognition of
services revenue over a longer or shorter period of time than previously planned, making it difficult to forecast future results. Costs associated with providing these services are recognized as incurred, resulting in variability in our gross
margins when costs and revenue are recorded in different periods.

During 2010 and prior years, when we sold services in a separate
arrangement after a customers initial use of our e-commerce solution, we recognized revenue from those services as one unit of accounting together with the related subscription revenue ratably over the remaining term of the subscription
agreement. Costs associated with providing these services were recognized as incurred, resulting in variability in our gross margins as costs and revenue were recorded in different periods. Under new revenue recognition guidance that we adopted on
January 1, 2011, we recognize revenue from services sold, or materially modified, together with the costs associated with providing the services, as the services are provided. This will result in our future services revenue being recognized over
differing periods, which may make our operating results more difficult to understand and less indicative of trends in our services business.

Risks
Related to This Offering and Ownership of Our Common Stock

An active trading market for our common stock may not develop, and you may not be
able to resell your shares of our common stock at or above the initial offering prices.

Before this offering, there was no
public trading market for our common stock. If a market for our common stock does not develop or is not sustained, it may be difficult for you to sell your shares of common stock at an attractive price or at all. The initial public offering price of
our common stock will be determined through negotiations between us and the underwriters. This initial public offering price may not be indicative of the market price of our common stock after the offering. In the absence of an active trading market
for our common stock, investors may not be able to sell their common stock at or above the initial public offering price or at the time that they would like to sell. We cannot predict the prices at which our common stock will trade. It is possible
that in one or more future periods our results of operations may be below the expectations of public market analysts and investors and, as a result of these and other factors, the price of our common stock may fall.

The market price of our common stock may be volatile, which could result in substantial losses for investors purchasing shares in this offering.

The market price of our common stock could be subject to significant fluctuations after this offering, and it may decline below
the initial public offering price. Some of the factors that may cause the market price of our common stock to fluctuate include:



price and volume fluctuations in the overall stock market from time to time;



significant volatility in the market price and trading volume of comparable companies;

actual or anticipated changes in our earnings or fluctuations in our operating results or in the expectations of securities analysts;



announcements of technological innovations, new products, strategic alliances or significant agreements by us or by our competitors;



litigation involving us;



investors general perception of us;



changes in general economic, industry and market conditions and trends; and



recruitment or departure of key personnel.

In the past, following periods of volatility in the market price of a companys securities, securities class action litigation has often been brought against that company. Because of the potential volatility
of our stock price, we may become the target of securities litigation in the future. Securities litigation could result in substantial costs and divert managements attention and resources from our business.

We may need financing in the future, and any additional financing may result in restrictions on our operations or substantial dilution to our stockholders.

We may need to raise funds in the future, for example, to develop new technologies, expand our business, respond to competitive
pressures, acquire complementary businesses, or respond to unanticipated situations. We may try to raise additional funds through public or private financings, strategic relationships, or other arrangements. Our ability to obtain debt or equity
funding will depend on a number of factors, including market conditions, our operating performance, and investor interest. Additional funding may not be available to us on acceptable terms or at all. If adequate funds are not available, we may be
required to reduce expenditures, including curtailing our growth strategies, foregoing acquisitions, or reducing our product development efforts. If we succeed in raising additional funds through the issuance of equity or convertible securities,
then the issuance could result in substantial dilution to existing stockholders. If we raise additional funds through the issuance of debt securities or preferred stock, these new securities would have rights, preferences, and privileges senior to
those of the holders of our common stock. The terms of these securities, as well as any borrowings under our credit agreement, could impose restrictions on our operations.

If securities or industry analysts do not publish, or cease publishing, research or reports about us, our business or our market, or if they publish negative evaluations of our stock, the price of our stock
and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that
industry or securities analysts may publish about us, our business, our market or our competitors. We do not currently have and may never obtain research coverage by financial analysts. If no or few analysts commence coverage of us, the trading
price of our stock would likely decrease. Even if we do obtain analyst coverage, if one or more of the analysts covering our business downgrade their evaluations of our stock, the price of our stock could decline. If one or more of these analysts
cease to cover our stock, we could lose visibility in the market for our stock, which in turn could cause our stock price to decline.

A
significant portion of our total outstanding shares may be sold into the public market in the near future, which could cause the market price of our common stock to drop significantly, even if our business is doing well.

Sales of a substantial number of shares of our common stock in the public market could occur at any time after the expiration of the lock-up
agreements described in the Underwriting section of this prospectus. These sales, or the market perception that the holders of a large number of shares intend

to sell shares, could reduce the market price of our common stock. After this offering, we will have shares of common stock
outstanding based on the number of shares outstanding as of , 2011. This includes
the shares that we are selling in this offering, which may be resold in the public market immediately. The
remaining shares, or % of our outstanding shares after this offering, are currently restricted as a result of securities laws or lock-up agreements but
will be able to be sold, subject to any applicable volume limitations under federal securities laws with respect to affiliate sales, in the near future as set forth below.

Number of Shares and %of Total
Outstanding

Date Available for Sale Into Public Market

shares, or %

On the date of this prospectus

shares, or %

90 days after the date of this prospectus

shares, or %

180 days after the date of this prospectus, subject to extension in specified instances, due to lock-up agreements between the holders of these shares and the underwriters. However,
Goldman, Sachs & Co. and Deutsche Bank Securities Inc. can waive the provisions of these lock-up agreements and allow these stockholders to sell their shares at any time

In addition, as of
, 2011, there were shares subject to an outstanding
warrant, shares subject to outstanding options and an additional shares reserved for future issuance under
our employee benefit plans that will become eligible for sale in the public market to the extent permitted by any applicable vesting requirements, the lock-up agreements and Rules 144 and 701 under the Securities Act of 1933, as amended, or the
Securities Act. Moreover, after this offering, holders of an aggregate of approximately shares of our common stock as of
, 2011, will have rights, subject to some conditions, to require us to file registration statements covering their shares or to
include their shares in registration statements that we may file for ourselves or other stockholders. We also intend to register all shares of common stock that we may issue under our employee benefit plans. Once we register these shares, they can
be freely sold in the public market upon issuance, subject to the lock-up agreements and the restrictions imposed on our affiliates under Rule 144.

Purchasers in this offering will incur immediate and substantial dilution in the book value of their investment as a result of this offering.

If you purchase common stock in this offering, you will incur immediate and substantial dilution of
$ per share, representing the difference between the assumed initial public offering price of $ per share
and our pro forma net tangible book value per share after giving effect to this offering and the automatic conversion of all outstanding shares of our preferred stock upon the closing of this offering. Moreover, we issued warrants and options in the
past to acquire common stock at prices significantly below the assumed initial public offering price. As of , 2011, there
were shares subject to an outstanding warrant with an exercise price of $ per share and shares subject to
outstanding options with a weighted average exercise price of $ per share. To the extent that these outstanding warrants or options are ultimately exercised, you will incur
further dilution.

Insiders will continue to have substantial control over us after this offering, which could limit your ability to influence the
outcome of key transactions, including a change of control.

After this offering, our directors and executive officers and their
affiliates will beneficially own, in the aggregate, approximately % of our outstanding common stock, assuming no exercise of the underwriters option to purchase additional shares of our common stock in this offering. As
a result,

these stockholders, if they act together, could have significant influence over the outcome of matters submitted to our stockholders for approval, including the election of directors and any
merger, consolidation or sale of all or substantially all of our assets, and over the management and affairs of our company. This concentration of ownership may have the effect of delaying or preventing a change in control of our company and might
affect the market price of our common stock.

Some of these persons or entities may have interests different than yours. For
example, because many of these stockholders purchased their shares at prices substantially below the price at which shares are being sold in this offering and have held their shares for a longer period, they may be more interested in selling our
company to an acquiror than other investors or may want us to pursue strategies that deviate from the interests of other stockholders.

After this offering, if insiders holding an aggregate of more than 50% of the voting power of our outstanding common stock determine to act as a group, we could avail ourselves of the controlled company
exemption under Section 303A of the New York Stock Exchange corporate governance listing standards, pursuant to which we would not be required to have a majority of independent directors on our board of directors or a compensation committee and
nominating and corporate governance committee composed entirely of independent directors. The independence standards are intended to ensure that directors who meet those standards are free of any conflicting interest that could influence their
actions as directors. Accordingly, if we elect to become a controlled company, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the New York Stock
Exchange. We currently do not intend to rely on this exception even if we qualify to do so.

We will incur increased costs as a result of
being a public company.

As a public company, we will incur increased legal, accounting and other costs not incurred as a private
company. The Sarbanes-Oxley Act and related rules and regulations of the Securities and Exchange Commission, or the SEC, and the New York Stock Exchange regulate the corporate governance practices of public companies. We expect that compliance with
these requirements will increase our expenses and make some activities more time consuming than they have been in the past when we were a private company. Such additional costs going forward could negatively affect our financial results.

Because we do not expect to pay any dividends on our common stock for the foreseeable future, investors in this offering may never receive a return on their
investment.

You should not rely on an investment in our common stock to provide dividend income. We do not anticipate that
we will pay any cash dividends to holders of our common stock in the foreseeable future. Instead, we plan to retain any earnings to maintain and expand our existing operations. In addition, our ability to pay cash dividends is currently limited by
the terms of our credit facility, which prohibits our payment of dividends on our capital stock without prior consent, and any future credit facility may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on
our common stock. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any return on their investment. As a result, investors seeking cash dividends should not
purchase our common stock.

Our management will have broad discretion over the use of the proceeds we receive from this offering and might
not apply the proceeds in ways that increase the value of your investment.

Our management will have broad discretion to use
our net proceeds from this offering, and you will be relying on the judgment of our management regarding the application of these proceeds. Our management might not apply our net proceeds of this offering in ways that increase the value of your
investment. We expect to use the net proceeds to us from this offering for financing our growth, working capital and other general corporate purposes, which may in the future include investments in,

or acquisitions of, complementary businesses, joint ventures, partnerships, services or technologies. Our management might not be able to yield a significant return, if any, on any investment of
these net proceeds. You will not have the opportunity to influence our decisions on how to use our net proceeds from this offering.

Anti-takeover
provisions in our amended and restated certificate of incorporation and our amended and restated by-laws, as well as provisions of Delaware law, might discourage, delay or prevent a change in control of our company or changes in our management and,
therefore, depress the trading price of our common stock.

Our amended and restated certificate of incorporation and amended and
restated by-laws and Delaware law contain provisions that may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive a
premium for your shares of our common stock. These provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. Our corporate governance documents include provisions:



establishing a classified board of directors with staggered three-year terms so that not all members of our board are elected at one time;



providing that directors may be removed by stockholders only for cause;



limiting the ability of our stockholders to call and bring business before special meetings and to take action by written consent in lieu of a meeting;



requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to
our board of directors;



authorizing blank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our common stock; and

As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation Law,
which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of our outstanding common stock. Any provision of our amended
and restated certificate of incorporation or amended and restated by-laws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our
common stock, and could also affect the price that some investors are willing to pay for our common stock.

The existence of the
foregoing provisions and anti-takeover measures could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of our company, thereby reducing the likelihood that
you could receive a premium for your common stock in an acquisition.

This prospectus contains forward-looking statements. All statements other than statements of historical facts contained in this prospectus,
including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks,
uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as may, should, expects,
plans, anticipates, could, intends, target, projects, contemplates, believes, estimates, predicts, potential or
continue or the negative of these terms or other similar expressions. The forward-looking statements in this prospectus are only predictions. We have based these forward-looking statements largely on our current expectations and
projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this prospectus and are subject to a number of
risks, uncertainties and assumptions described in the Risk Factors section and elsewhere in this prospectus. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted
or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially
from those projected in the forward-looking statements. Some of the key factors that could cause actual results to differ from our expectations include:



our inability to achieve or sustain profitability;



our limited operating history, which makes it difficult to evaluate our current business and future prospects;



our dependence on a limited number of customers for a substantial portion of our revenue;



the seasonality of our business;



our recognition of revenue from customer subscriptions over the term of the customer agreements; and



our substantial dependence on the continued growth of the market for on-demand software solutions.

Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein until after we
distribute this prospectus, whether as a result of any new information, future events or otherwise.

We obtained the industry, market and competitive position data in this prospectus from our own internal estimates and research as well as from
industry and general publications and research, surveys and studies conducted by third parties, including Euromonitor International Limited, or Euromonitor, and Gartner, Inc., or Gartner. Industry publications, studies and surveys generally state
that they have been obtained from sources believed to be reliable. We believe and act as if the third-party data contained herein, and the underlying economic assumptions relied upon therein, are generally reliable.

The Gartner report referenced herein, Forecast: Software as a Service, Worldwide, 2010-2015, 1H11 Update, Sharon A. Mertz, Chad
Eschinger, Tom Eid, Chris Pang, Laurie F. Wurster, June 22, 2011, which we refer to as the Gartner Report, represents data, research opinions or viewpoints published, as part of a syndicated subscription service, by Gartner, which are not
representations of fact. The Gartner Report speaks as of its original publication date and not as of the date of this prospectus, and the opinions expressed in the Gartner Report are subject to change without notice.

We do not know what assumptions regarding general economic growth were used in preparing the forecasts and projections we cite. Statements as to
our market position are based on recently available data. While we are not aware of any misstatements regarding industry data presented herein, our estimates involve risks and uncertainties and are subject to change based on various factors,
including those discussed under Risk Factors in this prospectus.

We estimate that our net proceeds from the sale of our common stock in this offering will be approximately $ million, assuming an initial public offering price of $ per share, which is the midpoint of
the range listed on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. A $1.00 increase (decrease) in the assumed initial public offering price
of $ per share would increase (decrease) the net proceeds to us from this offering by approximately $ million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by us. If the underwriters exercise their over-allotment option in full, we estimate that our net proceeds will be approximately $
million.

The principal purposes of this offering are to
obtain additional capital, to create a public market for our common stock and to facilitate our future access to the public capital markets.

We have not yet determined with any certainty the manner in which we will allocate the net proceeds of this offering. We intend to use the net proceeds to us from this offering for financing our growth, working
capital and other general corporate purposes. In addition we believe that opportunities may exist from time to time to expand our current business through acquisitions of or investments in complementary companies, products or technologies. While we
have no current agreements, commitments or understandings for any specific acquisitions at this time, we may use a portion of the net proceeds for these purposes.

Pending use of the proceeds as described above, we intend to invest the proceeds in short-term, interest-bearing, investment-grade securities.

DIVIDEND POLICY

We have not declared or paid any cash dividends on our capital stock since our inception. We intend to retain future earnings, if any, to finance the operation and expansion of our business and do not anticipate
paying any cash dividends in the foreseeable future. Any future determination to declare dividends will be subject to the discretion of our board of directors and will depend on various factors, including applicable laws, our results of operations,
financial condition, future prospects and any other factors deemed relevant by our board of directors.

The following table sets forth our cash and cash equivalents and capitalization as of June 30, 2011, as follows:



on an actual basis;



on a pro forma basis to reflect (1) the automatic conversion of all outstanding shares of our preferred stock into 54,086,305 shares of common stock upon
the closing of this offering and (2) the filing of our amended and restated certificate of incorporation as of the closing date of this offering; and



on a pro forma as adjusted basis to give further effect to our issuance and sale of
shares of common stock in this offering at an assumed initial public offering price of $per share, the midpoint of the price range listed on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

You should read this information in conjunction with our consolidated financial statements and the related notes appearing at the end of this
prospectus and the Managements Discussion and Analysis of Financial Condition and Results of Operations section and other financial information contained in this prospectus.

A $1.00 increase (decrease) in the assumed initial public offering price of $
per share, which is the midpoint of the range listed on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash and cash
equivalents, additional paid-in capital, total stockholders equity and total capitalization by approximately $ million, assuming that the number of shares offered by us,
as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The table above does not include:



12,857,879 shares of common stock issuable upon exercise of stock options outstanding as of June 30, 2011, at a weighted average exercise price of $0.52 per
share;



1,162,113 shares of common stock reserved as of July 31, 2011, for future issuance under our equity incentive plans; and



69,278 shares of common stock issuable upon exercise of a warrant outstanding as of June 30, 2011, at an exercise price of $1.30 per share.

If you invest in our common stock in this offering, your ownership interest will be immediately diluted to the extent of the difference between the
initial public offering price per share and the net tangible book value per share of our common stock after this offering. Our pro forma net tangible book value as of June 30, 2011 was $1.5 million, or $0.02 per share of our common stock. Pro forma
net tangible book value per share represents our total tangible assets reduced by the amount of our total liabilities, divided by the total number of shares of our common stock outstanding after giving effect to the automatic conversion of all
outstanding shares of our preferred stock upon the closing of this offering.

After giving effect to the sale of
shares of common stock that we are offering at an assumed initial public offering price of $ per share,
which is the midpoint of the range listed on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value
as of , 2011 would have been approximately $ million, or
approximately $ per share. This amount represents an immediate increase in pro forma net tangible book value of $
per share to our existing stockholders and an immediate dilution in pro forma net tangible book value of approximately $
per share to new investors purchasing shares of common stock in this offering. We determine dilution by subtracting the pro forma as adjusted net tangible book value per share
after this offering from the amount of cash that a new investor paid for a share of common stock. The following table illustrates this dilution:

Assumed initial public offering price per share

$

Pro forma net tangible book value per share as of June 30, 2011

$

0.02

Increase per share attributable to this offering

Pro forma as adjusted net tangible book value per share after this offering

$

Dilution per share to new investors

$

A $1.00 increase (decrease) in the assumed initial public offering price of $
per share, which is the midpoint of the range listed on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted net tangible book value per share
after this offering by approximately $ , and dilution in pro forma net tangible book value per share to new investors by approximately
$ , assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and
commissions and estimated offering expenses payable by us.

If the underwriters exercise their option to purchase additional shares of
our common stock in full in this offering, the pro forma as adjusted net tangible book value after the offering would be $ per share, the increase in pro forma net tangible
book value per share to existing stockholders would be $ and the dilution per share to new investors would be $
per share, in each case assuming an initial public offering price of $ per share, which is the midpoint
of the range listed on the cover page of this prospectus.

The following table summarizes, as of
, 2011, the differences between the number of shares purchased from us, the total consideration paid to us in cash and the
average price per share that existing stockholders and new investors paid. The calculation below is based on an assumed initial public offering price of $ per share, which is
the midpoint of the range listed on the cover page of this prospectus, before deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

Shares Purchased

Total Consideration

Average PricePer Share

Number

Percent

Amount

Percent

Existing stockholders

%

$

%

$

New investors

Total

100

%

100

%

The foregoing tables and calculations are based on the number of shares of our common stock outstanding as of
June 30, 2011 after giving effect to the automatic conversion of all outstanding shares of our preferred stock upon the closing of this offering, and excludes:



12,857,879 shares of common stock issuable upon exercise of stock options outstanding as of June 30, 2011, at a weighted-average exercise price of $0.52 per
share;



1,162,113 shares of common stock reserved as of July 31, 2011 for future issuance under our stock-based compensation plans; and



69,278 shares of common stock issuable upon exercise of a warrant outstanding as of June 30, 2011, at an exercise price of $1.30 per share.

To the extent any of these outstanding options or warrants is exercised, there will be further dilution to new
investors. To the extent all of such outstanding options and warrants were exercised as of , 2011, the pro forma as adjusted net
tangible book value per share after this offering would be $ , and total dilution per share to new investors would be
$ .

If the underwriters exercise their over-allotment option in
full:



the percentage of shares of common stock held by existing stockholders will decrease to approximately % of the total number of shares of
our common stock outstanding after this offering; and



the number of shares held by new investors will increase to , or approximately
% of the total number of shares of our common stock outstanding after this offering.

We may
choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity
or securities convertible into equity, the issuance of these securities may result in further dilution to our stockholders.

You should read the following selected consolidated financial data in conjunction with Managements Discussion and Analysis of
Financial Condition and Results of Operations and our consolidated financial statements and the related notes appearing elsewhere in this prospectus.

The consolidated statements of operations data for the years ended December 31, 2008, 2009 and 2010 and the consolidated balance sheet data at December 31, 2009 and 2010, are derived from our audited
consolidated financial statements appearing elsewhere in this prospectus. The consolidated statements of operations data for the years ended December 31, 2006 and 2007 and the consolidated balance sheet data at December 31, 2006, 2007 and
2008, are derived from our audited consolidated financial statements that are not included in this prospectus. The consolidated statements of operations data for the three months ended June 30, 2010 and 2011 and the consolidated balance sheet data
at June 30, 2011 are derived from our unaudited consolidated financial statements included in this prospectus. The unaudited consolidated financial statements include, in the opinion of management, all adjustments that management considers necessary
for the fair presentation of the financial information set forth in those statements. Our historical results are not necessarily indicative of the results to be expected in any future period.

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial
information included elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business, includes
forward-looking statements that involve risks and uncertainties. You should review the Risk Factors section of this prospectus for a discussion of important factors that could cause actual results to differ materially from the results
described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a leading provider of software-as-a-service e-commerce solutions that enable companies to easily design, implement and manage their own
customized e-commerce sites, including websites, mobile applications and other digital storefronts. Our customers use our highly scalable and integrated Demandware Commerce platform to create a seamless brand experience for consumers across all
digital touch points worldwide.

We sell subscriptions to our on-demand software and related services through both a direct sales force
and indirect channels. Our current customers consist of retailers and branded consumer product manufacturers that operate principally in the following vertical markets: apparel, general merchandise, health & beauty, home & garden, sporting
goods and other vertical categories.

We were formed in 2004, and initially focused on building our cloud-based architecture and
merchandising applications to allow us to service our customers. Sales were initially constrained due in part to the reluctance of some large companies to purchase software-as-a-service, or SaaS, solutions because of concerns around security,
reliability and control of their e-commerce solutions. However, the market opportunity for our solutions has increased significantly in the last several years, due both to increased acceptance of SaaS solutions across large enterprises and to
greater recognition of the benefits of our e-commerce solutions, which include enhanced merchandising functionality, high reliability, safety and security, ease of deployment, reduced time-to-market, flexible site customization and immediate
availability of continuous software innovation. From March 31, 2008 to June 30, 2011, the number of customers using our Demandware Commerce platform increased from 16 to 78, a 62.8% compound annual growth rate, or CAGR, and the number of
e-commerce sites operating on our platform increased from 39 to 253, a 77.8% CAGR.

We derive most of our revenue from
subscriptions to our on-demand platform and related services. Subscription fees are based on a variable revenue share pricing model, whereby our customers pay us a percentage of their total gross revenue that is processed on our platform. As part of
their subscription fee, our customers commit to a minimum level of gross revenue to be processed on our platform, from which a minimum monthly, quarterly or annual, non-refundable subscription fee is derived. If a customer processes more gross
revenue than their committed minimum level, then the customer is required to pay us additional fees, called overage fees, which are calculated as a percentage of the incremental revenue generated above the committed revenue. While we typically
record overage fees each quarter, a significant portion is recorded in the fourth quarter. No refunds or credits are given if a customer processes less gross revenue than the contracted level. Customer contracts are generally non-cancellable for a
minimum period that is typically three years and ranges from one year to seven years.

Subscription revenue accounted for 62.7%,
75.2%, 78.3% and 80.5% of our total revenue during the years ended December 31, 2008, 2009, 2010 and the six months ended June 30, 2011, respectively. Subscription revenue is driven primarily by the number of customers we have, the number

of e-commerce sites they operate on our platform, the contracted minimum value of our subscription agreements and the gross revenue generated from our customers in excess of their committed
minimum levels. To date, revenue generated by our customers traditional web e-commerce sites has been the primary driver of our subscription revenue. However, we believe that our cross-channel capabilities, including mobile, social and other
web channels, have been and will continue to be important factors in our new customers purchasing decisions.

We derive our
services revenue from the implementation of our customers e-commerce sites, which includes the integration of complementary technologies and adaptation to back-end systems and/or business processes and the configuration and deployment of the
site. We also provide training services for individuals who are part of the implementation, maintenance and optimization teams of our customers. In general, it takes from four to six months to implement a new customer e-commerce site on our
platform. Incremental e-commerce sites for a customer, including for additional brands or geographies, can be implemented in less than one month.

Deferred revenue primarily consists of the unearned portion of billed services fees or fees for our on-demand software. As we invoice nearly all our customers on a monthly or quarterly basis, our deferred revenue
balance does not serve as a reliable indicator of our future subscription revenue.

Our revenue growth has been driven by an
increased number of customers, as well as an increase in our average subscription revenue per customer. We have increased the number of customers operating on our platform from 16 as of March 31, 2008 to 78 as of June 30, 2011. In addition, our
average revenue per customer has continued to increase as our customers grow their online revenue processed on our platform through organic revenue growth of existing e-commerce sites and the launching of new sites in new geographies or for new
brands. The number of e-commerce sites that our customers operate on our platform increased from 39 as of March 31, 2008 to 253 as of June 30, 2011. Our revenue from outside the United States as a percentage of total revenue was 32.2%, 55.9%,
51.3% and 51.3% for the years ended December 31, 2008, 2009 and 2010, and the six months ended June 30, 2011, respectively.

Our subscription revenue fluctuates as a result of seasonal variations in our business, principally due to our customers revenue peaks during the holiday season, which correspondingly result in higher overage
fees in the fourth quarter than in other quarters. As a result, revenue in the first quarter generally declines sequentially from the fourth quarter. For the quarter ended March 31, 2011, subscription revenue was 8.3% lower than subscription
revenue for the quarter ended December 31, 2010.

Our cost of revenue and operating expenses have increased in absolute dollars
over the last year due to our need to increase bandwidth and capacity to support customer revenue growth on our platform. We expect that our cost of revenue and operating expenses will continue to increase in absolute dollars as we continue to
invest in our growth and incur additional costs as a public company.

We believe the large and growing market for SaaS e-commerce
solutions will provide us with significant growth opportunities. As e-commerce transactions continue to account for a greater proportion of all retail sales, we believe that retailers and branded consumer product manufacturers will continue to
enhance the performance and functionality of their e-commerce sites, increase their number of e-commerce sites and expand their online presence to encompass multiple digital channels. Just as companies have increasingly chosen SaaS solutions as an
attractive alternative to costly and inflexible on-premise solutions for their enterprise-wide applications, we believe that retailers and branded consumer product manufacturers will increasingly adopt SaaS solutions for their e-commerce needs.

We are focused on growing our business by pursuing the significant market opportunity for SaaS e-commerce solutions. We plan to grow
our revenue by adding new customers and helping our existing customers increase their revenue processed on our platform by taking full advantage of the

functionality of Demandware Commerce, by increasing the number of e-commerce sites deployed by them and by extending their online presence across multiple channels, including mobile phones,
social networks, call centers and in-store kiosks. We also plan to expand our customer base to include industry sectors, customer segments and geographic regions beyond those which we currently serve, including small- and medium-size businesses.

Key Metrics

We regularly
review a number of metrics to evaluate growth trends, measure our performance, formulate financial projections and make strategic decisions. We discuss revenue, gross margin, and the components of operating income and margin below under
Basis of Presentation, and we discuss other key metrics below.

Number of Customers

We believe that our ability to expand our customer base is an indicator of our market penetration and growth of our business as we continue to
invest in our direct sales force, our indirect sales channels and marketing initiatives. We define our number of customers at the end of a particular quarter as the number of customers generating subscription revenue during the period, and who have
a committed minimum level of gross revenue to be processed on our platform, from which a minimum monthly, quarterly or annual, non-refundable subscription fee is derived. As of June 30, 2011, we had 78 customers. For more information about our
customers, see BusinessCustomers.

Number of Customer E-commerce Sites

Since our customers generally operate more than one e-commerce site across various geographies and brands and pay us fees based on the total gross
revenue they process on our platform, we believe the total number of customer e-commerce sites using our solutions in a given quarter is an indicator of the growth of our business. As of June 30, 2011, our customers were operating 253 e-commerce
sites on our platform.

Subscription Dollar Retention Rate

We believe that our ability to retain our customers and expand their e-commerce revenue growth on our software platform over time is an indicator of
the stability of our revenue base and the long-term value of our customer relationships. We assess our performance in this area using a metric we refer to as our subscription dollar retention rate. We calculate the subscription dollar retention rate
by dividing the retained average contract value of subscription revenue by the previous average contract value of subscription revenue. We define retained average contract value of subscription revenue as the average annual contract value from
committed subscription fees for all contracts that renew in a given period. We define previous average contract value of subscription revenue as the average annual contract value from committed subscription fees for all contracts that expire in that
same period. Since our customer contracts are typically three years, we have a limited history of quantifying our subscription dollar retention rate. However, although we have lost individual customers from time to time, our customers that have
renewed their subscriptions have tended to increase their subscription commitment level to align with their increasing gross revenue volumes. As a result, our subscription dollar retention rate has been above 100% in both 2009 and 2010, and we
expect our subscription dollar retention rate to be above 100% in 2011.

We derive our subscription revenue from fees paid to us by our customers for their access to our on-demand e-commerce solutions for a specified
period of time. Fees are based on a revenue share of the total gross revenue our customers process through their e-commerce sites operating on our platform, and include a committed level of gross revenue from which a minimum monthly, quarterly or
annual, subscription fee is derived. Customer contracts are generally non-cancellable for a minimum period that is typically three years and ranges in length from one year to seven years. If customers process more than their committed gross revenue,
then we bill overage fees for the difference between the resulting revenue share and their committed minimum fee at the rates applicable in their contracts for the actual volume of revenue achieved. Overage fees represented 32.0%, 28.8% and 29.4% of
subscription revenue for the years ended December 31, 2008, 2009 and 2010, respectively. If customers process less than their committed gross revenue, no credit or refunds are given.

We recognize the minimum subscription fee ratably on a straight-line basis over the subscription term, provided that an enforceable contract has
been signed by both parties, access to our software has been granted to the customer, the fee for the subscription is fixed or determinable and collection is reasonably assured. Revenue from overage fees is recognized in the period in which that
volume is processed and earned. We also derive revenue from annual solution support fees when the services are first activated. The annual solution support fees are recorded as deferred revenue and recognized as revenue ratably on a straight-line
basis over the related subscription term. Set up fees paid by customers in connection with subscription services are deferred and recognized ratably over the longer of the term of the subscription agreement or the estimated expected life of the
customer relationship, which generally ranges from three to six years. We continue to evaluate the length of the amortization period of the set up fees as we gain more experience with customer contract renewals.

For a discussion of how we expect seasonal factors to affect our subscription revenue, see Quarterly Results of Operations
below.

Services Revenue

Services revenue consists primarily of fees associated with application configuration, integration and training services. Our service arrangements are billed on a fixed fee or time and materials basis. From time to
time, certain of our services projects are subcontracted to third parties. Our customers may also elect to use unrelated third parties to perform these services. Our typical service arrangement provides for payment to us within 30 to 60 days of
invoice.

Cost of subscription revenue primarily consists of hosting costs,
data communications expenses, depreciation expenses associated with computer equipment, personnel and related costs, including salaries, bonuses, payroll taxes, recruiting fees and stock compensation, software license fees and amortization expenses
associated with capitalized software. In addition, we allocate a portion of overhead, such as rent, information technology, or IT, costs, depreciation and amortization and employee benefits costs, to cost of revenue based on headcount. Expenses
related to the depreciation associated with computer equipment, hosting and data communications are affected by the number of customers using our on-demand software, the complexity of their e-commerce sites and the volume of transactions processed.
We plan to continue to significantly expand our capacity to support our growth, which will result in higher cost of subscription revenue in absolute dollars.

Cost of Services Revenue

Cost of services revenue primarily consists of personnel and related
costs, third-party contractors and allocated overhead. Our cost of services revenue is expensed as the costs are incurred. However, the related revenue from fees we receive for our services performed before a customer is operating on our platform is
deferred until the commencement of a subscription and recognized as revenue ratably over the longer of the related subscription term or the estimated expected life of the customer relationship. Therefore, the cost incurred in providing these
services is not expensed in the same periods as the revenue is recognized. Our cost associated with providing services has been significantly higher as a percentage of revenue than our cost of subscription revenue.

When we perform our services, we often supplement our internal resources with third-party contractors. We also work with a variety of system
integrators who sometimes lead implementation efforts. Finally, we have strategic relationships with companies who provide a full-service, comprehensive, end-to-end e-commerce solution by combining our Demandware Commerce platform with a host of
complementary services and technologies, such as logistics and warehousing, and who also lead implementation efforts as part of this comprehensive service. The cost of these services will fluctuate from quarter to quarter based on the number of
customers that are in the process of implementation, and also based on the extent to which the services are implemented by us or a third-party. We expect gross margins from services to decline over time as we grow our customer acquisition efforts,
which we expect to result in increased services costs in absolute dollars.

Operating Expenses

Sales and Marketing

Sales
and marketing expenses consist primarily of personnel and related expenses for our sales and marketing staff, including salaries, benefits, bonuses, stock-based compensation and commissions; costs of marketing and promotional events, corporate
communications, online marketing, product marketing and other brand-building activities; and allocated overhead. We expense sales commissions when the customer contract is signed because our obligation to pay a sales commission arises at that time.

We intend to continue to invest in sales and marketing and expect spending in these areas to increase in absolute dollars and as a
percentage of revenue as we continue to expand our business both domestically and internationally. We expect sales and marketing expenses to continue to be among the most significant components of our operating expenses.

Research and development expenses consist primarily of personnel and related expenses for our research and development staff, including salaries,
benefits, bonuses and stock-based compensation; the cost of certain third-party contractors; and allocated overhead. Research and development costs, other than software development expenses qualifying for capitalization, are expensed as incurred.

We have focused our research and development efforts on continuously improving our platform, including feature innovation as well
as platform extension. We believe that our research and development activities are efficient, because we benefit from maintaining a single software code base. We expect research and development expenses to increase in absolute dollars as we add new
functionality on the platform and expand our network infrastructure.

We expect our general and administrative expenses to increase as we continue to expand our operations, hire additional personnel and transition from being a private company to a public company. In transitioning to
a public company, we expect to incur additional expenses related to increased outside legal counsel assistance, accounting and auditing activities, compliance with Securities and Exchange Commission, or SEC, requirements and enhancing our internal
control environment through the adoption and administration of new corporate policies.

Other Income (Expense)

Other income (expense) primarily consists of interest income, interest expense and foreign exchange gains (losses). Interest income represents
interest received on our cash and cash equivalents. Interest expense is associated with our outstanding equipment term loans. Foreign exchange gains (losses) relate to expenses and transactions denominated in currencies other than our functional
currency.

Critical Accounting Policies and Estimates

Our financial statements and the related notes included elsewhere in this prospectus are prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial
statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, cost of revenue, operating expenses, other income and expenses, provision for income taxes and related disclosures. We base
our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Changes in accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could
differ significantly from our estimates. We evaluate our estimates and assumptions on an ongoing basis. To the extent that there are material differences between our estimates and our actual results, our future financial statement presentation,
financial condition, results of operations and cash flows will be affected.

We believe the assumptions and estimates associated with
the following accounting policies have the greatest potential impact on our financial statements: revenue recognition and deferred revenue; accounting for stock based compensation; and income taxes.

Our revenue is derived from sales of subscriptions to our on-demand e-commerce solutions and related services. We recognize revenue when:
(i) persuasive evidence of an arrangement for the sale of our e-commerce solutions or services exists, (ii) our e-commerce solutions have been made available or delivered, (iii) the sales price is fixed or determinable, and
(iv) collectability is reasonably assured. Evidence of an arrangement consists of a signed customer contract. We consider delivery of our e-commerce solutions to have commenced once a customer launches an initial e-commerce site, or at the
commencement of a subscription term, whichever is sooner, but in either case, not until our e-commerce solutions are made available to our customers for their use. Our fees are fixed based on stated revenue share rates specified in the customer
contract. We assess collectability based in part on an analysis of the creditworthiness of each customer, as well as other relevant economic or financial factors. If we do not consider collection reasonably assured, we defer the revenue until the
fees are actually collected.

Subscription fees are based on a variable revenue share pricing model, whereby our customers pay us a
percentage of their total gross revenue that is processed on our platform. Subscription revenue primarily consists of fees derived from contractually committed minimum levels of gross revenue processed on our platform and fees derived from our
customers gross revenue processed above minimum contracted levels. Customers do not have the contractual right to take possession of our on-demand software. Accordingly, we recognize the minimum subscription fee on a straight-line basis over
the subscription term, provided that an enforceable contract has been signed by both parties, access to our software has been granted to the customer, the fee for the subscription is fixed or determinable and collection is reasonably assured. Should
a customer exceed the specified contractual gross revenue volume, the customer is required to pay us additional fees, or overage fees, for the difference between the resulting revenue share and their committed minimum fee. We recognize revenue for
overage fees in the period in which the revenue is processed and earned. We do not recognize revenue in excess of the amount we have a right to invoice within an annual subscription year. Set up fees are deferred and recognized ratably over the
longer of the term of the subscription agreement or the estimated expected life of the customer relationship, which generally ranges from three to six years.

We also derive revenue from services related to the subscription to our e-commerce solutions. Services revenue consists primarily of fees associated with application configuration, integration and training. Our
services are performed by us directly, or by third party service providers, distributors or customers themselves without our involvement. Services that are sold with the subscription prior to the customers use of our e-commerce platform are
recognized ratably over the longer of the term of the subscription agreement or estimated expected life of the customer relationship, which generally ranges from three to six years. We continue to evaluate the length of the estimated expected life
of our customer relationships as we gain more experience with customer contract renewals.

In the first quarter of 2011 we adopted,
on a prospective basis, Accounting Standards Update 2009-13 Revenue Recognition (Topic 605)Multiple-Deliverable Revenue Arrangements  a Consensus of the Emerging Issues Task Force, or ASU 2009-13, formerly known
as EITF 08-1, Revenue Arrangements with Multiple Deliverables, which amended the accounting guidance for multiple-deliverable revenue arrangements to:



provide updated guidance on whether multiple deliverables exist, how the deliverables in an arrangement should be separated, and how the consideration should be
allocated;



require an entity to allocate revenue in an arrangement using estimated selling prices, or ESP of each deliverable if a vendor does not have vendor-specific
objective evidence of selling price, or VSOE, or third-party evidence of selling price, or TPE; and

eliminate the use of the residual method and require a vendor to allocate revenue using the relative selling price method.

Our services that are sold after a customer launches its initial e-commerce site, which are to assist customers with the configuration and
integration of our solution, have standalone value because our customers who purchase these services are already operating on our platform. Beginning on January 1, 2011, services that are sold after a customer launches an initial e-commerce site are
billed and recognized as revenue as the services are provided. Prior to the adoption of ASU 2009-13, we were not able to establish VSOE or TPE for our services that were sold after the initial contract. As a result, we recognized these services
ratably over the remaining contract period. Our e-commerce solution has standalone value because once a customer launches an e-commerce site our solution is fully functional and does not require any additional development, modification or
customization.

We are not able to determine VSOE or TPE for our deliverables because we have determined that there are no third-party
offerings reasonably comparable to our solution. Accordingly, we determine the selling prices of subscriptions to our solution and services based on ESP. In determining ESP for subscriptions to our solution, we consider the size of customer
arrangements, as measured by the volume of gross revenues processed by our customers, whether the sales were made by our direct sales team or distributors and whether the sales are to domestic or international customers. We group sales of our
solution into multiple different categories based on these criteria. We then compute an average selling price for each group. This average selling price represents our ESP for that type of customer arrangement. In determining ESP for services, we
analyze standalone purchases of services made subsequent to the original subscription. For these services arrangements, we then examine the actual rate per hour we charge or, for fixed fee arrangements, the implied average rate per hour based on the
fixed fee divided by the estimated hours to complete the service. The ESP is the product of this average rate per hour and our estimate of the hours needed to complete the services. In evaluating and arriving at ESP for services, we also consider
the reasonableness of the implied gross margins, as indicated by our internal costs to deliver such services, as well as comparisons to rates per hour for information technology consulting services in our industry generally.

The determination of ESP for our deliverables as described above requires us to make significant estimates and judgments, including the
comparability of different subscription arrangements and services and estimates of the hours required to complete various types of services. In addition, we consider other factors including the following:



Size and nature of the deliverables. In categorizing our subscriptions into meaningful groupings for determining ESP, we consider the size of the
customers e-commerce business, the number of sites launched and the committed minimum subscription fee. For services, we consider the extent of the services provided and the estimated hours required to complete the service based on our
historical experience.



Customer location. Our pricing is different for domestic and international customers, and therefore in determining ESP of subscriptions to our solution,
we evaluate domestic arrangements separately from international arrangements.



Market conditions and competitive landscape for the sale. Our pricing and discounting varies based on the economic environment and competition. We
consider these factors in determining the grouping of comparable services and the periods over which we compare arrangements to compute the ESP.

After we determine the fair value of revenue allocable to each deliverable based on the relative
selling price method, we recognize the revenue for each deliverable based on the type of deliverable. For subscriptions to our solution, we recognize the revenue on a straight-line basis over the term of the client agreement, which is typically
three years. For services sold after a customer launches its initial e-commerce site, we generally recognize revenue using the proportional performance method over the period the services are performed.

Deferred revenue represents amounts billed to customers for which revenue has not been recognized. Deferred revenue consists of the unearned
portion of services fees or the unearned portion of fees from subscriptions to our on-demand e-commerce solutions.

Accounting for Stock-Based
Compensation

We account for stock-based awards granted to employees and directors by recording compensation expense based on the
awards estimated fair values. We expect that our expense related to stock-based compensation will increase over time.

We estimate
the fair value of our stock-based awards as of the date of grant using the Black-Scholes option-pricing model. Determining the fair value of stock-based awards under this model requires judgment, including estimating the value per share of our
common stock adjusted for our status as a private company, estimated volatility, expected term of the awards, estimated dividend yield and the risk-free interest rate. The assumptions used in calculating the fair value of stock-based awards
represent our best estimates, based on managements judgment and subjective future expectations. These estimates involve inherent uncertainties. If any of the assumptions used in the model change significantly, stock-based compensation recorded
for future awards may differ materially from that recorded for awards granted previously.

In determining the fair value of our
stock-based awards, we use the average volatility of similar publicly traded companies to determine our estimated volatility. For purposes of determining the expected term of the awards in the absence of sufficient historical data relating to stock
option exercises for our company, we apply a simplified approach in which the expected term of an award is presumed to be the remaining contractual term as of the measurement date. The risk-free interest rate for periods within the expected life of
an award, as applicable, is based on the United States Treasury yield curve in effect during the period the award granted. Our estimated dividend yield is zero, as we have not and do not currently intend to declare dividends in the foreseeable
future.

Once we have determined the estimated fair value of our stock-based awards, we recognize the portion of that value that
corresponds to the portion of the award that is ultimately expected to vest, taking estimated forfeitures into account. This amount is recognized as an expense over the vesting period of the award using the straight-line method. We estimate
forfeitures based upon our historical experience and, at each period, review the estimated forfeiture rate and make changes as factors affecting the forfeiture rate calculations and assumptions change.

Significant Factors, Assumptions and Methodologies Used in Determining Fair Value of Common Stock

Given the absence of an active market for our common stock, our board of directors is required to estimate the fair value of our common stock at the
time of each grant of stock-based awards. Since 2007, our management has regularly commissioned an independent third-party valuation firm to prepare contemporaneous valuation analyses near the time of each grant to assist our board of directors in
this determination. The board of directors was informed of the most recent available valuation analysis prior to each grant date and considered that valuation along with other relevant

objective and subjective factors it deemed important in each valuation, exercising significant judgment and reflecting the board of directors best estimates at the time. These factors
included:



independent third-party valuations performed contemporaneously or shortly before the grant date, as applicable;



the nature and history of our business;



our operating and financial performance;



general economic conditions and the specific outlook for our industry;



significant new customer wins by us and by our competitors and our competitive position in general;



the lack of liquidity for our non-publicly traded common stock;



the market price of companies engaged in the same or similar lines of business whose equity securities are publicly traded in active trading markets;



the differences between our preferred and common stock in terms of liquidation preferences, conversion rights, voting rights and other features; and



the likelihood of achieving different liquidity events or remaining a private company.

We performed the valuations of our common stock in accordance with the guidelines outlined in the American Institute of Certified Public
Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. We first determined our enterprise value and then allocated this enterprise value to each part of our capital structure, both
preferred stock and common stock. We determined enterprise value using a combination of two generally accepted approaches, the market-based approach and the income approach.

The market-based approach measures the value of an asset or business through an analysis of recent sales or offerings of comparable investments or assets. In our case, we focused on comparing our company to
publicly traded comparable companies, or our benchmarked companies.

The income approach estimates value based on the expectation of
future net cash flows, which are then discounted back to the present using a rate of return derived from alternative companies of similar type and risk profile. Our use of the market-based approach and income approach methods resulted in fair values
for our common stock that were generally consistent with each other at each valuation date.

Given our significant focus on investing in
and growing our business, we weighted the market-based approach more heavily than the income approach, generally applying between 70% and 75% weight to the market-based approach. Because we are incurring operating losses and negative operating cash
flows as we grow and invest in our business, we believe that the market-based approach, which utilizes a revenue multiple, is the most useful metric for estimating our value as compared to other companies. After estimating our enterprise value, we
allocated the equity between the preferred and common stock using the probability-weighted expected return method, which considers the likelihood of an initial public offering and other scenarios, such as a sale of our company.

When considering which companies to include in our benchmarked companies, we focused on two sets of companies based in the United States: publicly
traded software companies that primarily deliver software using the SaaS business model similar to ours, and competitors that deliver e-commerce applications and solutions. As the benchmarked companies have either a similar business model to ours,
delivering SaaS, or compete for similar customers, we believe our cost structures are similar. The selection of benchmarked companies requires us to make judgments as to the comparability of these companies to us. While the benchmarked companies are
generally larger than

us in terms of total revenue and assets, several of the companies, like us, are in the investment and growth stage and have experienced operating losses while they have been growing their
businesses. Also, several of the comparable companies completed initial public offerings in recent years. The selection of benchmarked companies changes over time based on whether we believe the selected companies remain comparable to us. Based on
these considerations, we believe that the companies we selected are a representative group for purposes of performing valuations.

The
following table summarizes all option grants from January 1, 2009 through the date of this prospectus:

Number of OptionsGranted

Per Share ExercisePrice

Common Stock FairValue Per Share atGrant Date

Grant date

September 29, 2009

2,505,897

$

0.43

$

0.43

December 4, 2009

186,000

$

0.43

$

0.43

February 11, 2010

4,805,022

$

0.43

$

0.43

June 3, 2010

2,423,910

$

0.49

$

0.49

July 29, 2010

273,917

$

0.49

$

0.49

December 9, 2010

197,500

$

0.78

$

0.78

February 21, 2011

366,500

$

1.13

$

1.13

April 4, 2011

589,875

$

1.75

$

1.75

April 15, 2011

252,500

$

1.75

$

1.75

April 26, 2011

10,000

$

1.75

$

1.75

Significant factors contributing to changes in common stock fair value at the date of each grant beginning in
fiscal year 2009 were as follows:

September and December 2009. Our board of directors granted options to
purchase 2,505,897 shares of common stock with an exercise price per share of $0.43 on September 29, 2009. In estimating the fair value of our common stock to set the exercise price of such options as of September 29, 2009, the board of
directors reviewed and considered a final draft of an independent valuation report for our common stock as of April 30, 2009. The independent valuation report was finalized on June 23, 2009 and reflected a fair value for our common stock of
$0.43 as of April 30, 2009. Our board of directors determined that there were no significant factors affecting the value of our common stock that occurred between April 30, 2009 and September 29, 2009. In addition, at the time of the
September 29, 2009 grants, management had determined that we would likely meet our revised revenue goals for 2009, which was reduced from our board approved plan for 2009 and which was considered and incorporated into the April 30, 2009
independent valuation report. Though we were executing well to our revised revenue goals, new customer acquisition was slower than we planned and we eliminated certain billable service positions in August 2009 as a result of fewer customer
implementation opportunities.

Two months later, on December 4, 2009, when our results were similar to prior months, our board of
directors granted options to purchase 186,000 shares of common stock with an exercise price per share of $0.43. There had been no meaningful change in our performance since the last stock option grant date and therefore our board and management
believed that the estimated fair value of common stock had not changed since the September 29, 2009 grant.

The primary valuation
considerations were:



An enterprise value of $60.9 million as of the independent valuation report date, which was determined based on a combination of the market-based and income
approaches using the probability-weighted expected return method.

Liquidity event scenario probabilities of 15% for an initial public offering, 35% for a sale or merger and 50% for no value to the common shareholders either due
to dissolution or continuing as a private company. Our board of directors determined that our operating performance, stock market conditions in general, and the market for initial public offerings in particular, were such that it was unlikely that
we would be able to successfully complete an offering before 2012.



A relatively flat performance by the benchmarked companies for the quarter ended September 30, 2009 and no significant change in other factors that would
warrant a change in valuation.



The macro-economic conditions at the time, with uncertainty as to whether the overall economy would rebound in 2009, and the uncertainty as to the impact of the
recession on the purchasing patterns of our customer base, which was slower than both our board-approved operating plan, as well as our revised goals.

February 2010. Our board of directors granted options to purchase 4,805,022 shares of common stock with an exercise price per share of $0.43 on February 11, 2010. In estimating
the fair value of our common stock to set the exercise price of such options as of February 11, 2010, the board of directors reviewed and considered the fair value of our common stock granted since the April 30, 2009 valuation report and the
results of our operations during the intervening period. Several factors and uncertainties led our board to conclude that the estimated fair value of common stock had not changed since the September 29, 2009 grant, including:



Although we finished 2009 with revenue that exceeded the revenue that was assumed in our operating plan, one customer accounted for 27.9% of the total, and we
had acquired new customers more slowly than our assumptions included in both our 2009 operating plan and our revised goals that were incorporated into the independent valuation report for our common stock as of April 30, 2009.

As a result, our operating plan for 2010 assumed a lower revenue and a greater loss than had been assumed in creating
the April 30, 2009 valuation.



We finished 2009 with a net loss that was $2.5 million higher than our 2009 operating plan, and management concluded that an additional, unplanned investment of
cash would be necessary to fund operations in 2010.



The board determined that a change in leadership was needed, and Thomas D. Ebling was engaged as Chief Executive Officer in February 2010.



The macro-economic conditions at the time, with uncertainty as to whether the overall economy would rebound in 2010, the continued uncertainty as to the impact
of the recession on the purchasing patterns of our customer base and the uncertainty as to our performance under new leadership.

June and July 2010. Our board of directors granted options to purchase 2,423,910 shares of common stock with an exercise price per share of $0.49 on June 3, 2010. In estimating
the fair value of our common stock, our board of directors reviewed and considered an independent valuation, which was completed on May 28, 2010, that determined that the fair value of the common stock was $0.49 per share as of March 31,
2010, an increase of 14% from $0.43 at February 11, 2010.

Less than two months later, on July 29, 2010, when our results were similar to prior months, our
board of directors granted options to purchase 273,917 shares of common stock with an exercise price per share of $0.49. Little had changed since the last stock option grant date and therefore our board and management believed that the estimated
fair value of common stock had not changed since the June 3, 2010 grant. Although we finished the second quarter with our net loss on plan and also met our new customer acquisition metrics, the overall market conditions had declined
significantly in July. Therefore our board and management believed that the estimated fair value of common stock had not changed since the June 3, 2010 grant.

The primary valuation considerations were:



An enterprise value of $63.6 million as of the independent valuation report date, which was determined based on a combination of the market-based and income
approaches using the probability-weighted expected return method.



A discount rate of 30%, based on our estimated cost of capital.



A lack of marketability discount of 14%.



Liquidity event scenario probabilities of 20% for an initial public offering in 2013, 40% for a sale or merger and 40% for no value to the common shareholders
either due to dissolution or continuing as a private company. Though our likelihood for an initial public offering had increased from our prior valuation, our board of directors also determined that the general initial public offering market for
small technology companies was still not strong as reflected by the small number of initial public offerings in the first quarter of 2010. In addition, although we had met our board approved operating plan through the first five months of 2010, we
had just raised an unplanned round of equity that we believed was needed to operate through 2010 and many of the uncertainties identified at the beginning of the year had not yet been resolved.



The increase in the estimated fair value of the common stock from September 29, 2009 to March 31, 2010 was primarily due to application of relatively
similar revenue multiples we used in the prior independent valuation report of our benchmarked companies to our higher revenue forecast, resulting from our recent growth. In addition, the estimated fair value of our common stock increased due to the
assignment of a higher probability for a positive outcome, either through a merger or an initial public offering, as compared to the prior independent valuation report, due to a relative reduction in risk associated with the overall macroeconomic
uncertainty that existed at September 29, 2009.

December 2010. Our board of
directors granted options to purchase 197,500 shares of common stock with an exercise price per share of $0.78 on December 9, 2010. In estimating the fair value of the common stock to set the exercise price of such options as of
December 9, 2010, the board of directors reviewed and considered a final draft of an independent valuation report for our common stock as of September 30, 2010. The independent valuation report was finalized on December 3, 2010 and
reflected a fair value for our common stock of $0.78 as of September 30, 2010, an increase of 59.2% from $0.49 at March 31, 2010. Our board of directors determined that there were no significant factors affecting the value of our common
stock that occurred between September 30, 2010 and December 9, 2010.

The primary valuation considerations were:



An enterprise value of $95.3 million as of the independent valuation report date, which was determined based on a combination of the market-based and income
approaches using the probability-weighted expected return method.

Liquidity event scenario probabilities of 20% for an initial public offering in 2012, 45% for a sale or merger and 35% for no value to the common shareholders
either due to dissolution or continuing as a private company. The timing for a possible initial public offering was accelerated from 2013 to 2012 as the public markets began to improve in late 2010. Additionally, the probability for a sale or merger
increased as well as we continued to operate at or above our board-approved 2010 operating plan.



Our operating performance during the nine months ended September 30, 2010 improved primarily as a result of closing significant new customer contracts, as
well as realizing revenue growth from our existing customers.

February 2011. Our board
of directors granted options to purchase 366,500 shares of common stock with an exercise price per share of $1.13 on February 21, 2011. In estimating the fair value of the common stock to set the exercise price of such options as of
February 21, 2011, the board of directors reviewed and considered a final draft of an independent valuation report for our common stock as of January 1, 2011. The independent valuation report was finalized on February 15, 2011 and
reflected a fair value for our common stock of $1.13 as of January 1, 2011, an increase of 44.9% from $0.78 at September 30, 2009. Our board of directors determined that there were no significant factors affecting the value of our common
stock that occurred between January 1, 2011 and February 21, 2011.

The primary valuation considerations were:



An enterprise value of $122.6 million as of the independent valuation report date, which was determined based on a combination of the market-based and income
approaches using the probability-weighted expected return method.



A discount rate of 25%, based on our estimated cost of capital.



A lack of marketability discount of 20%.



Liquidity event scenario probabilities of 30% for an initial public offering in 2012, 50% for a sale or merger and 20% for no value to the common shareholders
either due to dissolution or continuing as a private company. The probability for either an IPO or a sale or merger scenario increased as we had a strong 2010, particularly in the fourth quarter.

April 2011. Our board of directors granted options to purchase 589,875, 252,500 and
10,000 shares of common stock with an exercise price per share of $1.75 on April 4, 2011, April 15, 2011 and April 26, 2011, respectively. In estimating the fair value of the common stock to set the exercise price of such options as of
April 4, 2011 and April 15, 2011, the board of directors reviewed and considered a final draft of an independent valuation report for our common stock as of March 15, 2011. The independent valuation report was finalized on
March 31, 2011 and reflected a fair value for our common stock of $1.75 as of March 15, 2011, an increase of 54.9% from $1.13 at January 1, 2011. Our board of directors determined that there were no significant factors affecting the
value of our common stock that occurred between March 15, 2011 and March 31, 2011.

The primary valuation considerations
were:



An enterprise value of $178.6 million as of the independent valuation report date, which was determined based on a combination of the market-based and income
approaches using the probability-weighted expected return method.

Liquidity event scenario probabilities of 35% for an initial public offering, 55% for a sale or merger and 10% for no value to the common shareholders either due
to dissolution or continuing as a private company. The probability for an IPO scenario increased from 30% to 35% from the January 1, 2011 valuation. In addition, the timing for a possible IPO was accelerated from 2012 to three possible
scenarios: late 2011, early 2012 or late 2012. The probability of an initial public offering increased due to progress in our business which indicated that an initial public offering in 2011 was more likely than previously estimated. In determining
the probabilities, our board of directors determined that the initial public offering market appeared to be improving significantly during the first quarter of 2011, particularly within the technology sector and companies of similar size and scale
to us. No value to common shareholders was deemed unlikely and assigned only a 10% probability.



We continued to realize revenue growth from our existing customers and our total revenue in the quarter ended March 31, 2011 grew 60.1% from the comparable
quarter in 2010.

Accounting for Income Taxes

We use the liability method of accounting for income taxes. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax bases of assets and
liabilities, using tax rates expected to be in effect during the years in which the bases differences are expected to reverse. We record a valuation allowance when it is not more likely than not that some of our net deferred tax assets will be
realized. In determining the need for valuation allowances, we consider our projected future taxable income and the availability of tax planning strategies. We have recorded a full valuation allowance to reduce our net deferred tax assets to zero,
because we have determined that it is not more likely than not that any of our net deferred tax assets will be realized. If in the future we determine that we will be able to realize any of our net deferred tax assets, we will make an adjustment to
the allowance, which would increase our income in the period that the determination is made.

We have assessed our income tax positions
and recorded tax benefits for all years subject to examination, based upon our evaluation of the facts, circumstances and information available at each period end. For those tax positions where we have determined there is greater than 50% likelihood
that a tax benefit will be sustained, we have recorded the largest amount of tax benefit that has a likelihood of greater than 50% of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant
information. For those income tax positions where we have determined there is a less than 50% likelihood that a tax benefit will be sustained, no tax benefit has been recognized in our financial statements.

The following table sets forth our statements of operations data for each of the periods indicated as a percentage of revenue. The period-to-period comparison of financial results is not necessarily indicative of
future results.

Year Ended December 31,

Six MonthsEnded June 30,

2008

2009

2010

2010

2011

Consolidated Statements of Operations Data:

Revenue:

Subscription

62.7

%

75.2

%

78.3

%

76.4

%

80.5

%

Services

37.3

24.8

21.7

23.6

19.5

Total revenue

100.0

100.0

100.0

100.0

100.0

Cost of revenue:

Subscription

42.7

18.5

17.0

16.3

17.9

Services

166.4

53.9

22.6

23.3

19.2

Total cost of revenue

209.1

72.4

39.6

39.6

37.1

Gross (loss) profit

(109.1

)

27.6

60.4

60.4

62.9

Operating expenses:

Sales and marketing

113.2

34.1

29.7

30.6

38.0

Research and development

69.2

23.1

16.6

17.9

22.1

General and administrative

40.5

17.4

11.4

12.9

12.2

Total operating expenses

222.9

74.6

57.7

61.4

72.3

(Loss) income from operations

(332.0

)

(47.0

)

2.7

(1.0

)

(9.4

)

Other (expense) income, net

(3.0

)

(1.1

)

(1.6

)

(4.6

)

1.9

(Loss) income before income taxes

(335.0

)

(48.1

)

1.1

(5.6

)

(7.5

)

Income tax expense

0.4

0.3

0.4

0.1

0.2

Net (loss) income

(335.4

)%

(48.4

)%

0.7

%

(5.7

)%

(7.7

)%

Comparison of Six Months Ended June 30, 2010 and 2011

Revenue

Six Months EndedJune 30,

Change

2010

2011

$

%

(dollars in thousands)

Subscription revenue

$

11,654

$

19,682

$

8,028

68.9

%

Percentage of total revenue

76.4

%

80.5

%

Services revenue

$

3,606

$

4,774

$

1,168

32.4

%

Percentage of total revenue

23.6

%

19.5

%

Subscription revenue. Subscription revenue for the six months ended June 30,
2011 increased by $8.0 million, or 68.9%, over the six months ended June 30, 2010. The increase was driven primarily by an increase of $5.4 million in revenue from new customers, and also an increase of $2.6 million in revenue from existing
customers through both organic site growth and the launch of additional e-commerce sites in the 2011 period. We had 78 customers and 253 e-commerce sites operating on our platform in the 2011 period, an increase from 53 customers and 143 e-commerce
sites operating on our platform in the 2010 period. Revenue realized from overage fees increased from $2.7 million to $5.5 million, an increase from 23.4% to 27.8% of subscription revenue, for the six months ended June 30, 2010 and 2011,
respectively.

Services revenue. Services revenue for the six months ended June
30, 2011 increased by $1.2 million, or 32.4%, over the six months ended June 30, 2010. The increase was driven by an increase in the number of customers from which we were recognizing services revenue during the 2011 period. In the 2011 period, we
recognized services revenue from 66 customers, an increase of 65.0% over the 2010 period in which we recognized services revenue from 40 customers. In addition in the 2011 period, we began recognizing revenue from service arrangements entered into
by our customers after their initial e-commerce site launch, as the services were performed using a proportional performance model, which for the six months ended June 30, 2011, increased revenue by $0.8 million over what would have been recognized
under the prior guidance.

Cost of Revenue

Six Months EndedJune 30,

Change

2010

2011

$

%

(dollars in thousands)

Cost of subscription revenue

$

2,490

$

4,369

$

1,879

75.5

%

Percentage of subscription revenue

21.4

%

22.2

%

Gross margin

78.6

%

77.8

%

Cost of services revenue

$

3,556

$

4,697

$

1,141

32.1

%

Percentage of services revenue

98.6

%

98.4

%

Gross margin

1.4

%

1.6

%

Cost of subscription revenue. Cost of subscription revenue for the six
months ended June 30, 2011 increased by $1.9 million, or 75.5%, over the six months ended June 30, 2010. The increase was primarily attributable to $0.9 million of increased depreciation and maintenance expenses associated with equipment for
our data centers and $0.5 million of increased hosting and bandwidth expenses due to an expansion of our capacity to accommodate expected growth during the 2011 period. In addition, we increased our headcount in our support and technical operations
team by 26.7% in the 2011 period, growing from 15 employees at June 30, 2010 to 19 employees at June 30, 2011. As a result, our personnel and related expenses, such as salaries, bonuses, payroll taxes, recruiting fees and stock compensation,
increased $0.4 million in the 2011 period.

Cost of services revenue. Cost of services revenue for the six
months ended June 30, 2011 increased by $1.1 million, or 32.1%, over the six months ended June 30, 2010. The increase was primarily attributable to $0.6 million of increased personnel and related expenses due to the addition of employees and $0.4
million of increased outside consulting expenses resulting from an increased use of third-party contractors to implement new customer e-commerce sites on our platform. The increases in headcount as well as third-party contractors resulted from an
increase in the number of customer implementations conducted during the 2011 period. In the 2011 period, we had more customers in the implementation stage, which resulted in a 30% increase in total project hours over the 2010 period.

Sales and marketing expenses for the six months ended June 30, 2011 increased by $4.6 million, or
99.1%, over the six months ended June 30, 2010. The increase was attributable to increases in marketing programs and the expansion of our sales force to address increased opportunities in new and existing markets. Total headcount within sales and
marketing increased from 39 at June 30, 2010 to 63 at June 30, 2011, an increase of 61.5%. We added employees within our direct sales, business development and marketing organizations in both North America and Europe which contributed to $2.1
million of increased personnel and related expenses. In addition, commissions and sales bonuses increased by $0.8 million, or 103.5%, in the 2011 period as a result of an increase in new customers acquired during the 2011 period. We also incurred
$0.7 million of increased marketing program expenses in the 2011 period to support our expansion of our domestic and international sales activities, including our hosting of a global customer conference in the 2011 period; we hosted no such similar
conference in the 2010 period. Finally, we incurred $0.6 million of increased travel and entertainment expenses and $0.4 million of increased allocated overhead costs such as rent, IT costs, and depreciation and amortization expenses incurred as a
result of our growth.

Research and Development

Six Months EndedJune 30,

Change

2010

2011

$

%

(dollars in thousands)

Research and development

$

2,722

$

5,411

$

2,689

98.8

%

Percentage of total revenue

17.9

%

22.1

%

Research and development expenses for the six months ended June 30, 2011 increased by $2.7 million,
or 98.8%, over the six months ended June 30, 2010. The increase was attributable to investments made to enhance and improve the functionality of our e-commerce platform. We increased our engineering headcount by 19 employees, or 63.3%, in the 2011
period, which contributed to increased personnel and related expenses of $1.9 million. In addition, we supplement our internal development efforts with third-party contractors, and increased the use of such resources in the 2011 period in order to
accelerate our development efforts. As a result, we incurred increased contractor costs of $0.8 million in the 2011 period.

General and Administrative

Six Months EndedJune 30,

Change

2010

2011

$

%

(dollars in thousands)

General and administrative

$

1,973

$

2,972

$

999

50.6

%

Percentage of total revenue

12.9

%

12.2

%

General and administrative expenses for the six months ended June 30, 2011 increased by $1.0 million, or
50.6%, over the six months ended June 30, 2010. The increase was driven by increased employee-related costs and professional fees to support our growing business. We incurred increased personnel and related costs of $0.4 million and increased
professional fees of $0.4 million for accounting, audit, legal and tax services incurred as a result of our growth and our transition from a private company to a public company. In addition, we incurred increased expenses of allocated overhead costs
of $0.1 million relating to overall increased expenses to support our continual growth. Finally, we recognized a loss of $0.1 million for disposed office furniture in the 2011 period that we did not incur in the 2010 period.

Because the change was from negative to positive, the percentage change is not calculable.

Other income (expense) for the six months ended June 30, 2011 increased $1.2 million over the six months ended June 30, 2010. The increase was
attributable to foreign exchange gains of $0.6 million related to fluctuations in the British pound sterling and Euro in relation to the U.S. Dollar in the 2011 period compared with foreign exchange losses of $0.7 million in the 2010 period.
This increase was partially offset by other expenses related to a number of individually insignificant items.

Comparison of Years Ended
December 31, 2008, 2009 and 2010

Revenue

Year Ended December 31,

Change from2008 to 2009

Change from2009 to 2010

2008

2009

2010

$

%

$

%

(dollars in thousands)

Subscription revenue

$

4,688

$

16,085

$

28,714

$

11,397

243.1

%

$

12,629

78.5

%

Percentage of total revenue

62.7

%

75.2

%

78.3

%

Services revenue

$

2,783

$

5,312

$

7,976

$

2,529

90.9

%

$

2,664

50.2

%

Percentage of total revenue

37.3

%

24.8

%

21.7

%

Subscription revenue. Subscription revenue increased $12.6 million, or 78.5%, from
2009 to 2010. The increase was driven primarily by an $11.5 million increase in revenue from new customers. We had 69 customers and 215 e-commerce sites operating on our platform by December 31, 2010, an increase from 40 customers and 104
e-commerce sites operating by December 31, 2009. In addition, revenue from existing customers grew $1.1 million from 2009 to 2010. The increase in revenue from existing customers resulted from both organic site growth and the launch of 111
additional sites in 2010. Revenue realized from fees in excess of contracted subscription minimums increased from $4.6 million, representing 28.8% of subscription revenue for the year ended December 31, 2009, to $8.4 million, representing 29.4%
of subscription revenue for the year ended December 31, 2010.

Subscription revenue increased $11.4 million, or 243.1%, from 2008
to 2009. The increase was primarily driven by an increase in revenue from new customers operating on our platform during 2009. We had 40 customers and 104 e-commerce sites operating on our platform by December 31, 2009, an increase from 23
customers and 50 e-commerce sites operating on our platform by December 31, 2008. In addition, 42.7% of the increase in 2009 was attributable to one large customer that launched on our platform in the second quarter of 2009. That customer
represented 30.3% of our total subscription revenue for the year ended December 31, 2009.

Services
revenue. Services revenue increased $2.7 million, or 50.2%, from 2009 to 2010. The increase was driven by an increase in the number of customers for which we were recognizing services revenue in 2010. We recognized
services revenue from 54 customers in 2010, while in 2009 we recognized services revenue from 37 customers.

Services revenue increased $2.5 million, or 90.9%, from 2008 to 2009. The increase was driven by an
increase in the number of customers for which we were recognizing services revenue in 2009. In 2009, we recognized services revenue from 37 customers, while in the 2008 period we recognized services revenue from 24 customers.

Cost of Revenue

Year Ended December 31,

Change from2008 to 2009

Change from 2009 to 2010

2008

2009

2010

$

%

$

%

(dollars in thousands)

Cost of subscription revenue

$

3,188

$

3,964

$

6,222

$

776

24.3

%

$

2,258

57.0

%

Percentage of subscription revenue

68.0

%

24.6

%

21.7

%

Gross margin

32.0

%

75.4

%

78.3

%

Cost of services revenue

$

12,435

$

11,533

$

8,282

$

(902

)

(7.3

)%

$

(3,251

)

(28.2

)%

Percentage of services revenue

446.8

%

217.1

%

103.8

%

Gross margin

(346.8

)%

(117.1

)%

(3.8

)%

Cost of subscription revenue. Cost of subscription revenue increased $2.3 million, or
57.0%, from 2009 to 2010. The increase was primarily attributable to a $0.8 million increase in depreciation and maintenance expenses associated with equipment for our data centers. In addition, we incurred an additional $0.8 million of increased
hosting and bandwidth expenses due to an expansion of our capacity, both in North America and in Europe, and $0.2 million of increased allocated overhead costs such as rent, IT costs, and depreciation and amortization expenses incurred in order to
accommodate our growth in 2010. Finally, we increased our headcount in our support and technical operations teams by 41.7% in 2010, increasing from 12 employees at December 31, 2009 to 17 employees at December 31, 2010. As a result, our
personnel and related expenses increased $0.4 million in 2010.

Cost of subscription revenue increased $0.8 million, or 24.3%, from 2008
to 2009. The increase was attributable to $0.5 million of increased depreciation and maintenance expenses associated with equipment for our data centers, $0.6 million of increased hosting and network infrastructure costs incurred to expand our
capacity in order to accommodate growth, offset by $0.3 million of software license costs incurred in 2008 that were not incurred in 2009.

Cost of services revenue. Cost of services revenue decreased $3.3 million, or 28.2%, from 2009 to 2010. The decrease was primarily attributable to a reduction in third-party contractor
costs that we incurred to implement new customer e-commerce sites on our platform. Contractor costs decreased $2.1 million from $5.0 million in 2009 to $2.9 million in 2010. The reduction in contractor costs resulted from a combination of utilizing
lower cost resources in our customer implementations as well as an overall reduction in hours required to complete an implementation. In addition, personnel and related expenses decreased by $1.1 million from 2009 to 2010. During 2009, we
streamlined our services organization and also changed the mix of employees to include more billable employees and fewer higher cost non-billable employees.

Cost of services revenue decreased $0.9 million, or 7.3%, from 2008 to 2009. The reduction in cost of services in 2009 resulted primarily from the change in mix of resources used on implementation projects from
higher cost third-party contractors to billable employees.

Sales and marketing expenses increased $3.6 million, or 49.0%, from 2009 to 2010. The increase was primarily
attributable to increases in marketing programs and the expansion of our sales force to address increased opportunities in new and existing markets. Total headcount in sales and marketing increased 64.5% from December 31, 2009 to
December 31, 2010, with the number of employees on our direct sales teams increasing by 44.0%, contributing to an increase of personnel and related costs of $2.2 million in 2010. In addition, we incurred $0.5 million of increased marketing
program expenses in 2010 to support our expansion of our domestic and international sales activities. Finally, we incurred $0.3 million of increased travel and entertainment expenses and $0.5 million of increased allocated overhead costs incurred as
a result of our growth.

Sales and marketing expenses decreased $1.2 million, or 13.6%, from 2008 to 2009. The decrease was primarily
attributable to $0.7 million of decreased commissions, sales bonuses and personnel and related expenses due a reduction in headcount. Total headcount within sales and marketing declined from 34 as of December 31, 2008 to 31 as of
December 31, 2009, a decrease of 8.8%. Notwithstanding continued growth in our business during 2009, we reduced our headcount at the beginning of 2009 as the global economy weakened. However, we reinvested in the second half of 2009 in order to
allow us to grow our business in 2010. In addition, we reduced our discretionary marketing programs spending in 2009 by approximately $0.3 million in response to the weakened economy.

Research and Development

Year Ended December 31,

Change from2008 to 2009

Change from2009 to 2010

2008

2009

2010

$

%

$

%

(dollars in thousands)

Research and development

$

5,173

$

4,950

$

6,091

$

(223

)

(4.3

)%

$

1,141

23.1

%

Percentage of total revenue

69.2

%

23.1

%

16.6

%

Research and development expenses increased $1.1 million, or 23.1%, from 2009 to 2010. The increase was primarily
attributable to increased headcount in both North America and Europe within our engineering group as we continued to add features and functionality to our platform. Total headcount within research and development increased from 24 at
December 31, 2009 to 35 at December 31, 2010, an increase of 45.8%, which contributed to $0.9 million of increased personnel and related expenses in 2010.

Research and development expenses decreased $0.2 million, or 4.3%, from 2008 to 2009. Although headcount decreased from 28 at December 31, 2008 to 24 at December 31, 2009, a decrease of 14.3%, our total
personnel expenses remained relatively flat between the two periods as we changed the mix of employees to add more senior level developers. In addition, our costs for external contract developers remained flat at $1.2 million in both 2008 and 2009.
The decrease in total research and development expenses was attributable to an overall decrease in allocated overhead costs in 2009.

General and administrative expenses increased $0.5 million, or 12.1%, from 2009 to 2010. The increase was primarily
attributable to $0.4 million of increased stock compensation in 2010, due to option grants to executives. The headcount in general and administrative increased from 12 employees to 14 employees from 2009 to 2010, and overall personnel expenses,
excluding stock compensation, increased $0.2 million from 2009 to 2010, which was partially offset by a $0.1 million decrease in professional fees in 2010.

General and administrative expenses increased $0.7 million, or 23.3%, from 2008 to 2009. Although headcount remained flat between December 31, 2008 and December 31, 2009, we did increase our executive
level positions and also increased our use of external consultants in 2009. As a result, our consulting costs and personnel and related expenses increased by $0.7 million in 2009.

Other (Expense) Income

Year Ended December 31,

Change from2008 to 2009

Change from2009 to 2010

2008

2009

2010

$

%

$

%

(dollars in thousands)

Other (expense) income

$

(223

)

$

(239

)

$

(582

)

$

(16

)

(7.2

)%

$

(343

)

(143.5

)%

Percentage of total revenue

(3.0

)%

(1.1

)%

(1.6

)%

Other (expense) income decreased $0.3 million, or 143.5%, from 2009 to 2010. The decrease was attributable to
greater foreign exchange losses of $0.4 million related to fluctuations in the British pound sterling and Euro in relation to the U.S. Dollar in 2010. This decrease was partially offset by other income related to a number of individually
insignificant items.

Other (expense) income remained flat between 2008 and 2009. We experienced lower foreign exchange losses of $0.1
million related to fluctuations in the British pound sterling and Euro in relation to the U.S. Dollar in 2009, which were offset by interest expense incurred on our debt related to equipment financings of $0.1 million in 2009. We did not
finance any equipment through equipment term loan obligations in 2008 and therefore did not incur any comparable interest expense.

The following tables set forth selected unaudited quarterly consolidated statements of operations data for the eight quarters in the period ended
December 31, 2010, and for the quarters ended March 31 and June 30, 2011, as well as the percentage of total revenue for each line item shown. The financial information presented for the interim periods has been prepared on the same basis
as the audited consolidated financial statements included elsewhere in this prospectus and, in the opinion of management, includes all adjustments, consisting of normal recurring adjustments, necessary for the fair presentation of the results of
operations for such periods. This data should be read in conjunction with the audited consolidated financial statements and the related notes included elsewhere in this prospectus. These quarterly operating results are not necessarily indicative of
our operating results to be expected for any future period.

The following table sets forth our number of customers and the aggregate number of their e-commerce sites for
the periods indicated:

Quarter Ended

March 31,2009

June 30,2009

Sept. 30,2009

Dec. 31,2009

March 31,2010

June 30,2010

Sept. 30,2010

Dec. 31,2010

March 31,2011

June 30,2011

Customers

28

32

38

40

46

53

60

69

75

78

E-commerce sites

60

70

95

104

123

143

175

215

237

253

In general, our revenue has increased as a result of an increase in the number of customers operating on our
platform, increased deployment of multiple e-commerce sites by existing customers and increased revenue attributable to overage fees. In most of the quarters presented, we added sales and marketing personnel to focus on adding new customers and
increasing penetration within our existing customer base and added technical support, services, research and development and administrative personnel to support our growth.

Our subscription revenue fluctuates as a result of seasonal variations in our business, principally due to the peak consumer demand and related increased volume of our customers revenue during the holiday
season. As a result, we have historically had higher subscription revenue in our fourth quarter than other quarters in a given year due to higher subscription fees derived from overage charges. In accordance with this trend, our subscription revenue
in the fourth quarter of 2009 exceeded subscription revenue in the preceding three quarters, as well as the first and second quarters of 2010. Our subscription revenue continued to grow in each quarter of 2010 and grew significantly more in the
fourth quarter due to the seasonality noted above.

Our gross profit increased sequentially in all but two quarters presentedthe
quarters ended March 31, 2010 and 2011, respectively. Along with the seasonally higher revenue we experience in the fourth quarter, we also experience higher overall gross profits in the fourth quarter. Our cost to run our infrastructure is
generally fixed within a given quarter. Therefore, when applied against our generally fixed costs, our higher revenue in the fourth quarter results in higher overall gross profits.

Sales and marketing expenses increased sequentially in every quarter presented except for the
quarter ended June 30, 2009, primarily as a result of increasing headcount in our direct and channel sales teams, as well as increased marketing programs and events. Sales and marketing expenses as a percentage of revenue varied from quarter to
quarter, mainly due to revenue increasing at a higher rate than increases in our sales and marketing expenses. Sales and marketing expenses as a percentage of revenue increased from 26.8% to 38.0% from the fourth quarter of 2010 to the six months
ended June 30, 2011, due to growth in headcount resulting in increased quarterly employee-related costs, commissions and sales bonuses.

Research and development expenses increased sequentially in every quarter presented except for the quarter ended June 30, 2009, primarily as a
result of increasing headcount to maintain and improve the functionality of our platform. Research and development expenses as a percentage of revenue increased from 13.8% to 22.1% from the fourth quarter of 2010 to the six months ended
June 30, 2011 due to growth in headcount and increased use of external contract developers resulting in increased quarterly employee-related costs and consulting expenses.

General and administrative expenses increased sequentially in every quarter presented except for the quarter ended June 30, 2009, primarily as
a result of increasing headcount to support the growth of our business. General and administrative expenses as a percentage of revenue increased from 9.2% to 12.2% from the fourth quarter of 2010 to the six months ended June 30, 2011 due to growth
in headcount and professional service fees, resulting in increased quarterly employee-related costs and professional fees.

More
generally, our quarterly operating results have fluctuated in the past and may continue to fluctuate in the future based on a number of factors, many of which are beyond our control. Such factors include, in addition to those in the Risk
Factors section of this prospectus:

the timing, committed subscription levels and revenue share rates at which we enter into contracts for our solutions with new customers;



the extent to which our existing customers renew their subscriptions for our solutions and the timing and terms of those renewals;



our ability to manage growth, including increases in the number of customers on our platform, additional customer sites and new geographies;



the timing and success of competitive solutions offered by our competitors;



changes in our pricing policies and those of our competitors;



the purchasing and budgeting cycles of our customers;



the financial condition of our customers; and



general economic and market conditions.

One or more of these factors may cause our operating results to vary widely. As such, we believe that our quarterly results of operations may vary significantly in the future and that period-to-period comparisons
of our operating results may not be meaningful and should not be relied upon as an indication of future performance.

To date, we have financed our operations primarily through private placements of preferred stock and
common stock, proceeds from equipment financings as described below and cash from operating activities. As of June 30, 2011, we had $17.7 million of cash and cash equivalents.

In July 2008, we entered into a loan and security agreement, or the 2008 Loan Agreement, which included a $3.0 million secured revolving credit facility. Although the revolving credit facility expired in June 2009,
the 2008 Loan Agreement was amended in May 2009 to include a $2.0 million equipment line of credit, or the Loan. Borrowings under the Loan could be made for eligible equipment purchases through December 31, 2009, and during the year ended December
31, 2009, we made borrowings totaling $1.4 million. The Loan is due in 36 equal monthly payments of principal, plus accrued interest, at an annual rate of 7.5% through December 31, 2012. In April 2010, we amended the Loan and increased the available
borrowings to an additional $4.0 million for equipment purchases made through December 31, 2010, and during the year ended December 31, 2010, we made borrowings totaling $2.9 million. Each advance under this amendment is payable over 36 months at a
fixed annual interest rate of 7.25%. In April 2011, we further amended the Loan and increased the available borrowings to an additional $4.0 million for equipment purchases made through March 31, 2012. As of June 30, 2011, we made borrowings under
this line of $2.4 million. Each advance under the June 2011 amendment is payable over 36 months at a fixed annual interest rate of 6.0%. As of June 30, 2011, total borrowings outstanding under the Loan were $4.9 million, and we had $1.6 million of
unused equipment lines available through March 31, 2012.

In August 2011, we further amended the 2008 Loan Agreement to include a
secured revolving credit facility of up to $5.0 million. Under the terms of the amendment, borrowing availability varies based upon eligible accounts receivable. The credit facility expires in August 2012, and borrowings bear interest at a variable
annual rate of 0.75% above prime rate. To date, we have not drawn down on our revolving credit facility.

The 2008 Loan Agreement is
secured by substantially all of our assets, except our intellectual property. The 2008 Loan Agreement also contains various covenants that limit, among other things, indebtedness, investments, liens, transactions, and certain mergers and sales of
assets. In addition, the loan contains financial covenants that impose a minimum adjusted quick ratio (as defined in the 2008 Loan Agreement) and minimum quarterly revenue targets. We were in compliance with all such covenants at June 30, 2011.

We believe our current cash and cash equivalents, cash flow from operations, amounts available under our loan agreement and net
proceeds of this offering will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months.

Net cash (used in) provided by operating activities. Cash provided by operating activities is significantly influenced by the amount of cash we invest in personnel and infrastructure
to support the

anticipated growth of our business, the increase in the number of customers using our on-demand software and services and the amount and timing of customer payments. Cash provided by operations
has historically resulted from net (loss) income driven by sales of subscriptions to our on-demand software and services and adjusted for non-cash expense items such as depreciation and amortization of property and equipment and stock-based
compensation. Our cash flows from operating activities are affected by the seasonality of our business, which results in variations in the timing of, our invoicing of, and our receipt of payments from, our customers. We have generally experienced
increased invoicing in the fourth quarter of each year mainly due to billings associated with revenue realized from subscription overage fees. As a result, we have also experienced increased levels of customer payments during the first quarter of
each year, related to the customer receipts from fourth quarter invoices. We expect this seasonality and resulting trends in cash flows from operating activities to continue.

Our cash provided by operating activities during the six months ended June 30, 2011 was primarily due to our net loss of $1.9 million, adjusted for $2.7 million in non-cash expenses that included $1.4 million of
depreciation and amortization, $0.9 million in stock-based compensation and $0.3 million of deferred rent expense. Additionally, our accrued expenses increased $0.9 million primarily due to legal fees associated with filing our registration
statement, commissions owed due to new customer acquisition during the period, and other employee related costs. This source of cash was partially offset by $0.6 million decrease in deferred revenue from customers who were invoiced annually prior to
the beginning of the fiscal year.

Our cash provided by operating activities during 2010 was primarily due to our net income of
$0.3 million, as our revenue growth, particularly in the fourth quarter, drove net income for the year despite growing operating expenses in 2010 by 32.3%. Cash provided by operating activities was adjusted for $2.9 million in non-cash expenses
that included $1.7 million of depreciation and amortization and $1.0 million in stock-based compensation. Working capital uses of cash included a $2.2 million increase in accounts receivable at year end due to higher customer billing volume compared
to the prior year mainly due to the increase in revenue from overage fees in the fourth quarter, and a $1.4 million increase in prepaid expense and other assets for prepaid support costs to maintain our increased number of PODs and for value added
tax refunds back to us. These uses of cash were offset in part by a $3.6 million increase in deferred revenue, due to more customers on our platform in 2010, a $0.8 million increase in accrued expenses, and a $0.8 million increase in accounts
payable due to a higher level of expenses consistent with the overall growth of our business.

Our cash used in operating activities
during 2009 was primarily due to our net loss of $10.4 million, as we focused on making additional investments in headcount and infrastructure to service existing growth and in anticipation of future growth. Cash used in operating activities was
adjusted for $1.9 million in non-cash expenses that included $1.4 million of depreciation and amortization and $0.5 million in stock-based compensation. Working capital uses of cash included a $3.3 million increase in accounts receivable due to
higher customer billing volume compared to the prior year. Additionally, working capital uses of cash included a $1.4 million decrease in accrued expenses, and a $1.7 million decrease in accounts payable both due to a lower level of contractor use
in 2009 compared to the prior year. These uses of cash were partially offset by an $8.2 million increase in deferred revenue, due to more customers on our platform in 2009.

Our cash used in operating activities during 2008 was primarily due to our net loss of $25.1 million, as we focused on making additional
investments in headcount and infrastructure in anticipation of future growth. Cash used in operating activities was adjusted for $2.0 million in non-cash expenses that included $1.2 million of depreciation and amortization, $0.5 million in
stock-based compensation and $0.3 million of deferred rent expense. Working capital uses of cash included a $3.9 million

increase in accounts receivable due to higher customer billing volume compared to the prior year. These uses of cash were offset in part by a $11.9 million increase in deferred revenue, due to
more customers on our platform in 2008, and a $2.8 million increase in accrued expenses due to a higher number of contractors used during the year compared to the prior year and increased vacation, bonus and commission accruals consistent with our
growth in headcount.

Net cash used in investing activities. Our primary investing activities have
consisted of capital expenditures to purchase computer equipment and furniture and fixtures in support of expanding our infrastructure and workforce. As our business grows, we expect our capital expenditures and our investment activity to continue
to increase.

For the six months ended June 30, 2011, cash used in investing activities consisted of $2.9 million for purchases
of property and equipment. In general, our purchases of property and equipment are primarily for data center equipment and network infrastructure to support our customer base, as well as equipment for supporting our increasing employee headcount.

For the year ended December 31, 2010, cash used in investing activities consisted primarily of $4.9 million for purchases of
property and equipment, primarily for the build out of our data center equipment and network infrastructure to support our customer base, as well as furniture and equipment to build out our corporate offices in Burlington, Massachusetts.

For the year ended December 31, 2009, cash used in investing activities consisted primarily of $1.4 million for purchases of property and
equipment, primarily for the build out of our data center equipment and network infrastructure to support our customer base.

For the
year ended December 31, 2008, cash used in investing activities consisted primarily of $2.7 million for purchases of property and equipment, primarily for the build out of our data center equipment and network infrastructure to support our
customer base.

Net cash provided by financing activities. Our primary financing activities have consisted
of capital raised to fund our operations as well as proceeds from and payments on equipment debt obligations entered into to finance our property and equipment, primarily equipment used in our data centers. As our business grows, we expect to
continue to finance our capital expenditures through equipment debt vehicles.

For the six months ended June 30, 2011, cash provided
by financing activities consisted of $1.2 million in proceeds from the issuance of our common stock in connection with stock option exercises as well as $2.4 million in proceeds from a note payable in connection with the financing of property
and equipment, partially offset by $0.7 million in payments in connection with our equipment debt obligations.

For the year ended
December 31, 2010, cash provided by financing activities consisted of $7.4 million in proceeds from the issuance of Series D preferred stock, $1.0 million in proceeds from the issuance of our common stock in connection with stock option
exercises, $2.9 million in proceeds from notes payable in connection with the financing of property and equipment, partially offset by $0.9 million in payments in connection with our equipment debt obligations.

For the year ended December 31, 2009, cash provided by financing activities consisted of $10.0 million in proceeds from the issuance of Series
D preferred stock, $3.3 million in proceeds from the issuance of notes payable to stockholders, which were later converted into Series D preferred stock, and $1.4 million in proceeds from notes payable in connection with the financing of property
and equipment, partially offset by $0.2 million in payments in connection with our equipment debt obligations.

For the year ended December 31, 2008, cash provided by financing activities consisted of
$9.1 million in proceeds from the issuance of Series C preferred stock, $1.5 million in proceeds from the issuance of notes payable to stockholders, which were later converted into Series D preferred stock and $0.1 million in proceeds from notes
payable in connection with the financing of property and equipment.

Contractual Obligations and Commitments

Our principal commitments consist of obligations under our outstanding debt facilities, leases for our office space, computer equipment, furniture
and fixtures, and contractual commitments for hosting and other support services. The following table summarizes these contractual obligations at December 31, 2010 (in thousands):

Payment Due by Period

Total

Less than 1Year

1-3Years

3-5 Years

More than 5years

(in thousands)

Operating lease obligations

$

6,370

$

804

$

3,042

$

2,524

$



Equipment notes payable

3,235

1,414

1,821





Hosting agreements

654

528

126





10,259

2,746

4,989

2,524



Off-Balance Sheet Arrangements

During the periods presented, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which
would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Quantitative and Qualitative Disclosures about Market Risk

We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate, foreign exchange and
inflation risks, as well as risks relating to changes in the general economic conditions in the countries where we conduct business. To reduce certain of these risks, we monitor the financial condition of our large customers and limit credit
exposure by collecting fees in advance and setting credit limits as we deem appropriate. In addition, our investment strategy currently has been to invest in financial instruments that are highly liquid and readily convertible into cash and that
mature within three months from the date of purchase. To date, we have not used derivative instruments to mitigate the impact of our market risk exposures. We have also not used, nor do we intend to use, derivatives for trading or speculative
purposes.

Interest Rate Risk

We are exposed to market risk related to changes in interest rates. Our investments are considered cash equivalents and primarily consist of money market funds backed by United States Treasury Bills and
certificates of deposit. At June 30, 2011, we had cash and cash equivalents of $17.7 million. The carrying amount of our cash equivalents reasonably approximates fair value, due to the short maturities of these instruments. The primary
objectives of our investment activities are the preservation of capital, the fulfillment of liquidity needs and the fiduciary control of cash and investments. We do not enter into investments for trading or speculative purposes. Our investments are
exposed to market risk due to a fluctuation in interest rates, which may affect our interest income and the fair market value of our investments. Due to the short-term nature of our investment portfolio,

however, we do not believe an immediate 10% increase or decrease in interest rates would have a material effect on the fair market value of our portfolio. We therefore do not expect our operating
results or cash flows to be materially affected by a sudden change in market interest rates.

We do not believe our cash equivalents
have significant risk of default or illiquidity. While we believe our cash equivalents do not contain excessive risk, we cannot provide absolute assurance that in the future our investments will not be subject to adverse changes in market value. In
addition, we maintain significant amounts of cash and cash equivalents at one or more financial institutions that are in excess of federally insured limits. We cannot be assured that we will not experience losses on these deposits.

At June 30, 2011, we had borrowings outstanding with principal amounts of $4.9 million. Our outstanding long-term borrowings consist of fixed
interest rate financial instruments. The interest rate of our fixed rate borrowings ranges between 6.0% and 7.5%. The carrying amount of these long-term borrowings approximates fair value based on borrowing rates currently available to us. A
hypothetical 10% increase or decrease in interest rates relative to interest rates at June 30, 2011 would not have a material impact on the fair values of all of our outstanding borrowings.

Foreign Currency Exchange Risk

We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. Dollar. Our customer contracts are generally denominated in the currencies of the countries
in which the customer is located. Our historical revenue has been denominated in U.S. Dollars, the Euro and British Pound Sterling. The effect of an immediate 10% adverse change in foreign exchange rates on foreign-denominated accounts receivable at
June 30, 2011 would have a 6% adverse impact on our total accounts receivable balance at June 30, 2011. Our operating expenses are generally denominated in the currencies of the countries in which our operations are located, primarily the United
States and, to a much lesser extent, the United Kingdom and Germany. More than one quarter of our employees are located in a country other than the U.S. Increases and decreases in our foreign denominated revenue from movements in foreign exchange
rates are partially offset by the corresponding decreases or increases in our foreign-denominated operating expenses.

As our
international operations grow, our risks associated with fluctuation in currency rates will become greater, and we will continue to reassess our approach to managing this risk. In addition, currency fluctuations or a weakening U.S. Dollar can
increase the costs of our international expansion. To date, we have not entered into any foreign currency hedging contracts, since exchange rate fluctuations have not had a material impact on our operating results and cash flows. Based on our
current international structure, we do not plan on engaging in hedging activities in the near future.

Inflation Risk

We do not believe that inflation has had a material effect on our business, financial condition or results of operations.
Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and
results of operations.

We are a leading provider of software-as-a-service e-commerce solutions that enable
companies to easily design, implement and manage their own customized e-commerce sites, including websites, mobile applications and other digital storefronts. Our customers use our highly scalable and integrated Demandware Commerce platform to
create a seamless brand experience for consumers across all digital touch points worldwide. By simplifying access to the complex e-commerce functionality required for an effective and engaging consumer experience, we enable our customers to more
easily launch, manage and integrate multiple e-commerce sites, initiate marketing campaigns more quickly and improve e-commerce site traffic, all of which can lead to increased revenue. Our on-demand platform offers the high reliability and security
required by customers for their e-commerce sites, in addition to automatic increases in the processing capacity of our customers e-commerce sites to meet surges in demand. Through our software-as-a-service, or SaaS, multi-tenant delivery
model, we combine the functionality, flexibility and customization capabilities of in-house solutions with the lower costs, speed of implementation and other operational benefits of outsourcing.

Through our on-demand SaaS platform, our customers run the latest version of our software and have access to a steady stream of new and innovative
e-commerce functionality as soon as it becomes available. By using our platform, our customers avoid the need for a large upfront investment in on-premise hardware infrastructure and in customized software that is difficult and expensive to
implement, upgrade and maintain. They also avoid the limitations of generic vendor-created e-commerce solutions that typically do not offer the flexibility and functionality necessary for merchants and retailers to create, manage and control their
own customized online brand presence. We have built a marketplace called Demandware LINK that leverages our open development platform to allow our customers quickly and easily to use an extensive library of integrations to third-party applications
that can reduce the cost and complexity of adding capabilities, such as campaign management, dynamic product imaging, order management, social commerce and ratings and reviews. Through our network of data centers, we continually monitor the
environment in which our customers e-commerce sites operate for performance, availability and accuracy of content delivery. We have provided 99.98% average site availability (excluding planned downtime) since 2005.

Our customers include multinational corporations, large retailers and branded consumer product manufacturers, such as Barneys New York, Burton,
Columbia Sportswear, Crocs, House of Fraser, Jewelry Television, Jones Apparel Group, Lifetime Brands, LOreal and neckermann.de. We sell our solutions domestically and internationally through both direct and indirect channels. We have direct
sales teams throughout North America and Europe and distributor relationships with full service e-commerce vendors that combine our Demandware Commerce platform with a host of complementary services and technologies, such as logistics and
warehousing, to provide comprehensive end-to-end e-commerce solutions. See Note 2 to the consolidated financial statements included elsewhere in this prospectus for information on our operations in different geographic regions.

We have structured our contracts to align our interests with those of our customers by participating in a share of our customers gross
revenue processed on our platform. We derive our subscription revenue from fees paid to us by our customers for their access to our e-commerce solutions for a specified period of time. Our fees are based on a percentage of the total gross revenue
our customers process through their e-commerce sites, which operate on our platform, and include a committed level of annual gross revenue from which a minimum subscription fee is derived. If a customer exceeds that baseline subscription amount, we
are paid a percentage of the gross revenue processed by that customer on our platform in excess of its committed minimum subscription. Our customer contract terms are typically three years and range from one year to seven years.

Since our inception, we have expanded our offerings and customer base through organic growth. The
following charts show the aggregate number of customers using Demandware Commerce and the aggregate number of their e-commerce sites operating on our platform, from March 31, 2008 to June 30, 2011.

We generated revenue of $7.5 million, $21.4 million and $36.7 million in 2008, 2009 and 2010, respectively. We
generated revenue of $24.5 million in the six months ended June 30, 2011, an increase of 60.3% from our revenue of $15.3 million in the six months ended June 30, 2010. We had net losses of $25.1 million and $10.4 million and net income of $0.3
million in 2008, 2009 and 2010, respectively, and a net loss of $1.9 million for the six months ended June 30, 2011.

Industry Overview

E-Commerce is a Key Driver of Growth for the Retail Industry

We believe our total addressable market is at the center of three large and growing industries: retail, e-commerce and SaaS. According to Euromonitor, the global retail industry in 2010 was $11.6 trillion, of which
only 2.7% was conducted online. The overall global retail industry grew at a 4.8% compound annual growth rate, or CAGR, from 2005 to 2010, while the global e-commerce market grew at a 17.3% CAGR over the same period to reach $316.5 billion in 2010,
demonstrating the significant service shift from offline to online retail during this period and the increasing importance of e-commerce within the retail industry. The global e-commerce industry is expected to reach $653.0 billion in 2015, growing
at a CAGR of 15.6% from 2010 to 2015. In addition, the adoption of SaaS solutions has grown significantly, and, according to Gartner, estimated worldwide total software revenue for SaaS delivery within the enterprise applications software markets is
expected to reach $21.3 billion in 2015, growing at a CAGR of 16.3% from 2010 to 2015.

The double-digit growth of the e-commerce market
is being driven by several factors, including ubiquitous broadband internet connectivity across an increasing number of devices, growing consumer familiarity and comfort with and preference for online shopping and new online shopping models such as
social shopping, group buying and flash sales. The increase in the number of manufacturers seeking to market their brands directly to consumers through their own e-commerce sites has also been a major contributor to this growth.

Increasing Complexity of E-Commerce

While the e-commerce market is expanding, it is also becoming more complex, particularly for global multi-channel retailers and branded consumer
product manufacturers trying to reach consumers with consistent storefronts across multiple channels, geographies and digital touchpoints. Several trends are driving this increased complexity:



Need to Maintain Scale and Global Presence. Companies that are unable to maintain the quality and functionality of their e-commerce
sites as they grow risk losing both existing and prospective consumers domestically and internationally. Significant infrastructure can be required to provide a reliable online presence that can be quickly and easily scaled to meet growing worldwide
consumer demands.

Increasing Consumer Demand for Compelling Content and Commerce. As the speed, functionality and sophistication of internet
applications continue to improve, consumers increasingly expect a rich, interactive and personalized e-commerce experience, such as active merchandising, social commerce, dynamic product imaging and ratings and reviews. In order for businesses to
remain competitive, they must be able to dynamically update and personalize their product offerings to stay current with emerging consumer trends and rising consumer expectations.



Proliferation of Retail Channels. E-commerce is expanding beyond traditional web storefronts viewed on a personal computer due to
the rapid proliferation of internet-enabled devices, including in-store kiosks, smart phones, tablets, and other devices, allowing consumers to access information and shop through an increasing number of digital retail channels. Consumers
increasingly expect a consistent, high-quality and relevant experience across all digital retail channels.



Integration of Systems and Business Processes. Businesses have dramatically recast their online presence from static e-commerce
sites focused mainly on presentation of basic product information or simple purchasing to dynamic, interactive hubs for consumer marketing, transactions, communications and services. Businesses require robust, scalable and global e-commerce
solutions that can integrate with other enterprise solutions, such as enterprise resource planning, customer relationship management, order management, call centers, supply chain management and business intelligence systems.



Rapid Pace of Innovation. Technology to facilitate e-commerce is rapidly evolving. For example, new internet-enabled devices are
continually developed, updated and made available to consumers at low cost. As the switching costs for consumers adopting the newest technologies remain low and new shopping models evolve, the pressure for companies to keep up with the pace of
innovation increases. Companies must be able to invest in and implement new innovative technologies quickly and cost-effectively to be able to reach consumers through new devices or channels, or risk losing them.

Limitations of Traditional E-Commerce Solutions

Traditionally, there have been two common solutions for the creation and management of an e-commerce business: on-premise enterprise software, which is built, customized and maintained by the merchant itself; and
outsourcing, where the entire e-commerce platform for a retailer or brand is outsourced to a third-party provider. While traditional on-premise enterprise software solutions offer the benefits of in-house control and differentiation through custom
development, they typically have the following disadvantages:



Higher Upfront Cost. On-premise software implementations are typically architected to be deployed with large information
technology, or IT, teams and require significant upfront investments. These solutions can be ineffective for todays retailers and branded consumer product manufacturers, who prefer to focus on their core competencies, such as managing their
brands and merchandising their products, rather than maintaining IT infrastructure and e-commerce performance.



Difficult to Maintain, Upgrade and Scale. Maintenance of traditional on-premise solutions is characterized by ongoing software
implementations and on-premise customizations that require significant IT investment before, during and after the upgrade. These internal customizations make it time-consuming and expensive to enhance functionality and also make it difficult for
retailers to easily upgrade to the newest release from a software provider. It is also challenging and expensive to scale the required infrastructure, particularly to meet surges in demand.

While outsourcing an e-commerce site offers the benefits of minimal required resources for internal
infrastructure management and ongoing support, it has the following disadvantages:



Limited Customization and Functionality. Vendor-created outsourced solutions offer limited platform flexibility, making it
difficult to change functionality or to control merchandising. This can be unsatisfactory for retailers, who prefer to proactively manage and control their online brand presence given the critical nature of brand as a key differentiator in
todays retail environment.



Lack of Integration with Business Processes. The online presence of many retailers has evolved from a simple website to a
cross-channel hub for marketing, transactions, communications and services. The lack of innovation and extendibility of a fully outsourced solution, in addition to the lack of integration with business processes, can limit retailers ability to
effectively manage their brands across multiple channels.

Opportunity for Software-as-a-Service E-Commerce Solutions

A SaaS delivery model can combine the lower costs, speed of implementation and other operational benefits of outsourcing with
the functionality, flexibility and customization capabilities of on-premise enterprise software solutions. As a result, the adoption of SaaS solutions across industries has grown significantly and outpaced the growth of traditional on-premise
enterprise software product delivery. In addition, the adoption of SaaS solutions has grown significantly, and, according to Gartner, estimated worldwide total software revenue for SaaS delivery within the enterprise applications software markets is
expected to reach $21.3 billion in 2015, growing at a CAGR of 16.3% from 2010 to 2015.

E-commerce is a critical strategy for a
significant number of branded consumer product manufacturers and retailers worldwide. In the e-commerce market, we believe there is a significant opportunity for a company that can offer a comprehensive SaaS solution designed to address the
increasingly complex requirements of retailers and brands seeking to attract and satisfy consumers in the digital world.

The Demandware Solution

Demandware Commerce combines enterprise-class e-commerce capabilities and functionality with a SaaS multi-tenant delivery model. We
deliver our solutions on-demand to enable our customers to more easily launch and manage multiple sites, initiate marketing campaigns more quickly and improve site traffic, all of which can lead to increased revenue. We believe that our on-demand
solutions provide the following benefits to our customers:



Broad Merchandising Functionality. Our platform uses a web-based interface to provide one central location for our customers to
control and manage their e-commerce sites  from products to pricing to placement to content. A robust set of sophisticated, yet easy-to-use merchandising tools, including catalog management, customer profiling, pricing, promotions and
e-commerce search, provides retailers with enhanced functionality and control to help optimize their e-commerce sites efficiency, growth and profitability. Our solutions are able to easily categorize, price, and display products, while
efficiently presenting multiple cross-channel promotions, enabling merchandisers to optimize the online shopping experience of their consumers while driving greater revenue. Our functionality also helps retailers strengthen consumer loyalty by
delivering tailored user experiences across all digital channels.

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High Reliability, Safety and Security. We provide high uptime, robust security and built-in disaster recovery through our network
of state-of-the-art data centers. We have provided 99.98% average availability (excluding planned downtime) since 2005. Our flexible on-demand platform allows us to quickly and seamlessly increase the processing capacity of our
customers e-commerce sites to meet surges in demand. We also provide 24/7 monitoring of the environment in which our customers e-commerce sites operate, measuring for

performance, availability and accuracy of content delivery. Our platform is supported by a dynamic cloud-based architecture and complies with the Payment Card Industry, or PCI, security
standards, which is generally referred to as PCI compliant. Our platform has been benchmarked to handle at least 1,400 dynamic page views per second.

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Ease of Deployment and Reduced Time To Market. Using our Demandware Commerce platform, customers can easily deploy new e-commerce
sites without the need to install or integrate their own hardware and software infrastructure. In addition, customers can leverage our platform to quickly and easily add new sites without the need to expand their own infrastructure. Through
Demandware LINK, our customers can access an extensive library of integrations to third-party applications to expand the capabilities and functionality of their e-commerce sites. These features enable our existing customers to accelerate their
time-to-market for new e-commerce sites and quickly implement new functionality. In addition, we believe that our typical four to six month platform implementation cycle for new customers is shorter than the period generally required for the
development and deployment of comparable on-premise e-commerce software solutions.

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Customizable E-Commerce Sites. Demandware Commerce allows our customers to quickly and easily customize and deliver a highly
flexible digital storefront, using our powerful and intuitive tools based on procedural programming languages such as JavaScript. This gives our customers the flexibility and control of a custom development environment with the convenience,
scalability and security of on-demand, multi-tenant delivery. Our open development environment allows our customers developers to customize the front-end of their e-commerce sites while sharing our multi-tenant on-demand merchandising
platform. As a result, developers and IT professionals can focus their efforts and resources on innovation rather than infrastructure.

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Continuous Innovation. Consumers increasingly expect greater functionality and relevance from their online experience. Through our
SaaS platform, we are able to provide a steady stream of new and innovative e-commerce functionality through multiple product upgrades each year, which our customers can deploy to access the latest technologies on their e-commerce sites. Our
customization and integration changes are implemented through automatic upgrades with minimal or no effort required by our customers so they can avoid the time and expense associated with constantly upgrading to new versions with traditional
providers. When we enhance our enterprise-class platform, our entire customer community benefits from our latest innovations by being on the same release cycle. In addition to our internal product development work, we work collaboratively with our
customers on an ongoing basis to enhance and improve our solutions based on their specific functional requests.

Our Strategy

Our mission is to extend our position as a leading provider of SaaS e-commerce solutions to become the global backbone for digital
commerce between retailers or branded consumer product manufacturers and their consumers. Key elements of our strategy include:

Retaining and Expanding Business with Existing Customers. As our solutions become increasingly integral to our
customers digital commerce success, we expect to maintain our strong retention rates by providing our customers with high levels of service and support as well as new e-commerce capabilities and functionality. We have structured our contracts
to align our interests with those of our customers by participating in a share of our customers gross revenue processed on our platform. We believe we have the following opportunities to grow our business with our customers:

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Increasing Customers Gross Revenue. Because we share in the gross revenue processed by customers on our platform, we also
share an interest in optimizing the effectiveness, engagement and performance of our customers e-commerce sites. Early in the site implementation process, we assign an e-commerce strategist to engage with our customers to ensure that their
goals are met. Once our customers sites are operating on our platform, their

assigned e-commerce strategist works hand-in-hand with our customers e-commerce teams to help grow their revenue by taking full advantage of the functionality of Demandware Commerce.

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Increasing the Number of Customers E-Commerce Sites. We intend to expand the adoption of Demandware Commerce within our
existing customers organizations. After initial deployments, many of our customers seek to expand their e-commerce presence by launching additional distinct revenue-generating e-commerce sites for different geographies, brands and channels on
our Demandware Commerce platform. Our single instance code base allows our customers to launch e-commerce sites for multiple brands or in multiple geographies cost-effectively and with minimal involvement from their internal IT staff.

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Extending the Platform Across Channels. The internet is a central hub for our customers digital commerce strategies. We have
and will continue to extend Demandware Commerce to support channels where consumers want to shop, including smart phones, social networks, call centers and in-store kiosks. A significant part of our strategy includes keeping up-to-date on emerging
trends in how consumers shop and making sure we have the functionality on our platform to enable that type of activity.

Growing Our Customer Base. A significant element of our strategy involves winning new customers. We believe that
managing a successful e-commerce operation is more demanding and complex than ever and companies will increasingly migrate to solutions like ours. We believe the continued growth of e-commerce as a strategic and differentiated sales channel provides
us with a significant opportunity to acquire new customers by:

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Investing in Direct Sales. A significant portion of our market includes companies that are currently using on-premise or outsourced
e-commerce platforms that were not designed for advanced merchandising, marketing and customer experience innovation and that do not offer the benefits of a SaaS solution. There are also companies that have an online presence but do not facilitate
e-commerce transactions. As a result, we plan to grow both our enterprise and mid-market direct sales teams to win more of these customers domestically and internationally.

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Significantly Growing our European Operations. We believe a substantial opportunity exists to continue to grow sales of our
solutions internationally, particularly in Europe. We intend to continue to grow our European operations by further investing in direct sales, strategic alliances, services and support in the region.

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Expanding and Strengthening Our Strategic Alliances. We have strategic relationships with companies such as eCommera, NETRADA and
PFSweb that provide full-service end-to-end e-commerce solutions by combining our Demandware Commerce platform with a host of complementary services and technologies, such as logistics and warehousing. We intend to continue to grow our distribution
channels through these key alliances, as well as build new alliances.

Targeting New
Markets. We believe substantial demand for our solutions exists in industry sectors, customer segments and geographic regions beyond those on which we are currently focused, including:

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Small- and Medium-Sized Businesses. We are building a sales team to target small- and medium-sized retailers and emerging brands
that are just starting to implement their e-commerce strategies and want to quickly scale their online business through strategies that may include mobile commerce, social media, multiple branded sites and international expansion. We also plan to
expand our alliances to increase our distribution capabilities for customers in the early stage of developing their e-commerce capabilities.

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Asia Pacific. We currently assist customers in launching and managing e-commerce sites for consumers in the Asia Pacific region. We
also expect to build sales and service operations in the Asia Pacific region.

Continuing to Innovate and Add New Functionality to Our Platform. We
believe we have developed a deep understanding of the digital commerce challenges faced by our customers. We continually collaborate with our customers to build extensive product functionality that addresses their specific needs and requests. We
plan to use our expertise in e-commerce to develop new applications, features and functionality that will enhance our solutions and expand our addressable market. We also plan to add incremental functionality to our applications opportunistically
through acquisitions and to invest in our Demandware LINK program by adding new partners and expanding our relationship with current partners so that our customers have access to a growing library of integrations to third-party applications.

Products and Services

Demandware Commerce
Platform

We offer a comprehensive on-demand e-commerce platform, a network of alliance partners that extends the value of the
platform, and a business model designed for sustained customer revenue growth. We deliver our solutions on-demand to our customers who can access and can manage it over the internet using a standard web browser. We have built our solutions using a
single code base and a multi-tenant, multi-user architecture that we host.

The following diagram illustrates the key interactive
channels and various components of our Demandware Commerce platform:

Customer Experience Application. Demandware Commerce provides a single
platform that our customers can use to manage consumer interactions across all digital touch points worldwide, enabling a seamless and consistent brand experience on any channel. Our reference applications are based on e-commerce best practices and
can be customized to individual needs, with full access to a sophisticated cross-channel merchandising engine and open development environment. Our applications include:

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Web Storefront Applications. With Demandware Commerce, a customer can build a new e-commerce site from scratch or leverage our best
practices pre-built storefront, called Site Genesis, to gain quicker time to market. The Site Genesis storefront provides merchandisers with best practice examples of how to run and manage promotions, dynamic search tools, synonym dictionaries and
price books. It also includes a multi-site blueprint for technical architects. The Site Genesis storefront can be used as is with out-of-the-box functionality or can be leveraged as a starting point for an e-commerce site that could then be further
customized using our UX Studio application to meet a customers unique requirements.

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Call Center Application. Our call center application allows our customers call center agents to quickly access order,
consumer and product information through a single web-based interface, enabling a more efficient and engaging experience for the consumer. Using this application, agents are able to easily search for products using advanced search techniques and
guided navigation. In addition to providing improved customer service, agents can use this software to gain a single view into a consumers entire order history and recommend products using rules established by our merchandising tools.

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Mobile Application. Our mobile application offers a customizable mobile storefront with the functionality our customers need to
create a compelling shopping experience for consumers on their mobile devices. Our Demandware Commerce platform provides a unified development environment between the mobile storefront and our customers other e-commerce sites for ease of
customization and site management. Our mobile application is compatible with all major browsers and with popular smart phones, such as the iPhone, Android and BlackBerry.

Demandware Commerce Center.Demandware Commerce Center is a centralized and unified environment for control
and management of all consumer e-commerce experiences across multiple sites and applications. Unlike traditional work environments that require multiple interfaces to manage processes across products, merchandising, consumers, orders and sites,
Demandware Commerce Center provides one central access point for management. In addition, users are able to create customized dashboards to display the most commonly used activities and thus increase their efficiency and enhance their ability to
manage and change consumer experiences.

Active Merchandising, which is a metrics-driven online selling engine that controls merchandising interactions across search, personalization, analytics,
promotions and catalog according to rules created by each of our customers.